L3 and Harris announce the biggest-ever defence merger

THE aerial party tricks of the F-35, a stealth fighter made by Lockheed Martin, an American defence giant, wows audiences at air shows across the world. But without the sensors and electronics made by firms such as L3 Technologies and Harris, two medium-sized firms, the plane would not get off the ground. The F-35 would be too unstable for a pilot to fly without help from its on-board computers. The deal between these two companies, which was announced on October 14th, is also designed to add a bit of stability.The tie-up, worth $33.5bn, is the defence industry’s biggest-ever merger. L3 Harris will become America’s sixth-largest defence firm. Harris’s chief executive, Bill Brown, sees two big benefits. First, cost-cutting will save $500m a year, $300m of which it promises to return to customers such as America’s Department of Defence by reducing prices. This should also ensure that the government does not block the deal. Second, combining the two firms’ technologies should help them to come up with new products. The deal will form a “dream team” of defence firms, says Carter Copeland of Melius Research, a consultancy. L3’s expertise in sensors and Harris’s communications equipment, for instance, could be used to send data about an enemy’s location to augmented-reality goggles worn by soldiers.
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