Harris Sweetened Initial $22/share All-Cash Offer For Exelis Thrice: Filing

(RTTNews) - Telecommunications equipment maker Harris Corp. (HRS) is currently in the process of completing its acquisition of smaller rival Exelis, Inc. (XLS). The companies are said to have submitted documents to the DoJ and FTC on February 24 as well as the FCC on the next day to secure antitrust clearance for the deal.

Harris agreed on February 6 to acquire McLean, Virginia-based Exelis, Inc. (XLS) for $23.75 per share in cash and stock, or an enterprise value of about $4.75 billion. The deal is currently expected to close in June 2015, subject to approval by Exelis shareholders.

The deal, billed as the largest defense deal in almost 20 years, will create entity that will emerge one of the top ten largest defense contractors with a broader range of offerings.

Meanwhile, a regulatory filing on Thursday revealed that Harris sweetened its offer thrice to strike the deal last month at $23.75 per share, after initially proposing $22 per share in cash for Exelis on November 11 at a dinner meeting of the two CEO's.

According to a Registration Statement Form S-4, Harris then sweetened the offer to $23.00 per share, with a preferred structure of 70 percent cash and 30 percent Harris common stock. The offer was later raised to $23.50 on November 29 in writing, and finally sweetened to $23.75 on January 12, with a structure of 70% cash and 30% Harris common stock.

The CEO's also on February 3 agreed to a reverse break fee of $300 million, if Harris were to fail to close the transaction due to lack of financing.

Harris CEO Bill Brown began initial feelers and talks with Exelis CEO David Melcher on the deal in mid-September 2014 itself while Exelis was still in the process of spinning off its mission systems business as an independent company called Vectrus, Inc. (VEC). Exelis completed splitting itself into two separately separate publicly traded companies only on September 27.

Exelis itself was created in October 2011 as a result of the spin-off of ITT Corp.'s (ITT) defense business into an independent, publicly traded company.

HRS closed Thursday's trading at $76.44, down $0.30 or 0.39% on a volume of 0.69 million shares, and XLS closed at $24.05, down $0.05 or 0.21% on a volume of 1.63 million shares.