Exelis shares soar 35% following $4.4 billion deal with Harris

Harris Corp. on Friday said it agreed to buy Exelis Inc. in a cash-and-stock deal valued at about $ 4.4 billion, a little more than four months after Exelis spun off its government-services business.

The $ 23.75-a-share price tag represents a 34% premium over Exelis’ closing price Thursday. Exelis XLS, +1.90%  investors will receive about $ 16.63 in cash for each share, and the remainder will be in Harris HRS, +1.18%  stock. The deal has an enterprise value of $ 4.75 billion, the companies said.

After the acquisition closes, Harris shareholders will own about 85% of the combined company.

Harris said it expects to complete the acquisition in June, and that the deal will be slightly accretive to earnings in the first full year, with more significant contributions coming later.

Harris also said it expects pretax cost synergies of $ 100 million to $ 120 million, with the savings will come from consolidating the companies’ headquarters and eliminating other costs from operations.

An expanded version of this report appears on WSJ.com


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