HARRIS CORP. HAS signed a definitive agreement to acquire Tyco Electronics' (formerly known as M/A-COM) Wireless Systems business for $675 million in cash subject to post-closing adjustments. The goodwill arising on completion of this acquisition will be an allowable tax expense with an estimated net present value of $60 million, resulting in an effective purchase price of $615 million.
Tyco Electronics Wireless Systems, a business segment of Tyco Electronics Ltd., was formed in 1999. It grew through the acquisition of ComNet Ericsson in 2001 to create Tyco Wireless Systems, a provider of mission-critical wireless communications systems for law enforcement, fire and rescue, and public-service organizations.
Wireless Systems will be combined with the Harris RF Communications business segment to create a new organization that will provide end-to-end wireless-network solutions to the growing $9-billion global land-mobile-radio systems market. Wireless Systems is headquartered in Lowell, MA with product development and manufacturing facilities in Lynchburg, VA. It has approximately 1150 employees including 500 engineers and scientists. End-to-end solutions include network systems and software solutions; mobile and portable radio equipment; broadband WiMAX products for high-speed data applications; and operations, service, and maintenance. The business is a key player in the wireless communications standards process. It has driven its products to open standards in US and international markets including the next-generation digital APCO P25 standard.
The transaction excludes the State of New York wireless-network contract, which was awarded to Wireless Systems in December 2004. Wireless Systems' revenue for the fiscal year ending Sept. 26, 2008 was $463 million. Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $86 million. The acquisition is expected to be slightly accretive to Harris earnings in fiscal 2010 excluding acquisitionrelated chargesand a significant contributor to earnings in fiscal 2011 and 2012. The acquisition is expected to close prior to the Harris fiscal 2009 year end on July 3, 2009.
Wireless Systems will operate as a business unit under the Harris RF Communications segment headquartered in Rochester, NY. Chuck Dougherty will continue to serve as President of Wireless Systems and will report to Dana Mehnert, President of RF Communications.