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Harris Merger Paper

Satisfactory Essays

Brief overview Just like Harris Corporation, Exelis Inc. is mainly in business as a defense contractor for U.S Government. It manufactures high tech weaponry such as integrated electronic warfare, sensing and surveillance, air traffic management, information and cyber security, and networked communications. Exelis also provides aerostructures, logistics, and technical services. Even though U.S government is the main customer, Exelis also serves commercial clients, with international customers comprising about 10% of sales. Reasons for acquisition: U.S defense budget had peaked in 2010, and since then it has been gradually declining. Since U.S government defence agencies are the main customer for Harris Corp and Exelis Inc., there are not many opportunities for organic growth. The acquisition will bring consolidation among mid-size defense companies …show more content…

Harris corp had lost contract obligations with U.S Navy and Air Force, at the same time, Exelis has gain few department of defence business. The acquisition will help Harris Corp. to gain back the business lost from U.S department of defence. Both companies lack certain capabilities, and the merger will help them to improve areas where each company is lacking behind. Another reason why Exelis is the best choice is because it sells equipment to NASA, whereas, Harris has minimum presence in NASA. NASA is Exelis's fourth largest federal customer. Big portion of defense agencies budget goes towards payment of personnel working for it. But for NASA, most of the budget is spend on purchase of equipment. Through Exelis, Harris corp. Can better exploit this market. Harris estimates that the merger will create synergies by cutting costs in a range of $100 million to $120 million. Most of the savings are expected from merging headquarters and eliminating public company costs and from operational and functional

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