Updated at 10:23 AM EST
Viasat announced that it will sell its military-communications business unit to L3Harris Technologies for $1.96 billion. Viasat expects to use the net cash proceeds of $1.80 billion to reduce its debt and increase its liquidity.
L3Harris Technologies (NYSE:LHX) could soon announce a deal to buy the Link 16 military communications business unit of Viasat (NASDAQ:VSAT) in a transaction that could be worth $2 billion, according to the Wall Street Journal.
Based in the U.S., L3Harris Technologies, Inc. is a technology-based aerospace and defense company that provides advanced defence and commercial technologies across air, land, sea, space and cyber domains to clients globally. The company is a result of the merger between Harris Corporation and L3 Technologies in June 2019.
The Wall Street Journal report highlighted that Russia’s invasion of Ukraine has turned the military’s focus onto cybersecurity as well as to satellite-based communications.
Link 16 Tactical Data Links is a part of Viasat’s government-systems segment. It is also a part of the combined network of military aircraft, surface vessels, ground vehicles, and bases that are made to share voice-and-data communications in a safe manner.
Given the upsurge in demand, the addition of Link 16 Tactical Data Links could turn out to be a smarter move for L3Harris Technologies.
Link 16 Tactical Data Links accounts for 33.33% of Viasat’s government business. The sale proceeds will be used to repay Viasat’s debt.
Is L3Harris Stock a Buy?
As per TipRanks, analysts are cautiously optimistic about the LHX stock and have a Moderate Buy consensus rating, which is based on six Buys and three Holds. L3Harris Technologies stock’s average price forecast of $278.56 implies 34.03% upside potential.
L3Harris shares, with a current market capitalization of $40 billion, have outperformed the benchmark indices year-to-date. The stock has declined only 2% compared to the S&P 500’s (SPX) decline of 25%. Furthermore, the company’s CEO aims to make L3Harris a serious contender for large supply contracts to the Pentagon.
No wonder, TipRanks’ Stock Investors tool shows that investors currently have a positive stance on L3Harris Technologies, with a 1.3% of investors on TipRanks increasing their exposure to LHX stock over the past 30 days.
The company is scheduled to report its Q3 earnings results on October 27, after the market closes.
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