BAE Invests $2.2 Billion For Expanding Electronic Systems Operations In The U.S.

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BAE Systems has announced it is ready to invest USD 2.2 billion to buy Collins and Raytheon’s airborne tactical radio unit in order to expand their electronic system operations in the United States. The two businesses BAE System plans to are being offloaded as a result of the merger betweenUnited Technologies and Raytheon. As per the statement from BAE, the purchase remains hinged to the completion of the merger between the two companies.

The two assets would never have been available had the merger terms not required the two companies to offload them. BAE CEO Charles Woodburn acknowledged the same and stated that BAE is actually benefiting from the merger by buying the asset. The merger between United Technologies and Raytheon was announced back in June last year and will make a company with a total net worth of around USD 121 billion. As per the statement from BAE, it will be acquiring Collins Aerospace’s Military Global Positioning System by paying USD 1.925 billion and the Raytheon’s Airborne Tactical Radios business for USD 275 million, both the payments to be made in cash. While the Raytheon’s purchase will be funded by existing cash, the Collins Aerospace deal will be funded by a new external debt. Both the deals are expected to bring an instant impact to the company barging in with tax benefits of USD 365 million and USD 50 million from UTC and Raytheon deals respectively.

Talking about the impact of the deal on company’s market stance, the deal meant that the company’s shares went up by 2.5 per cent to reach 639 pence, their highest mark since July 2018. The Electronic Systems business accounts for 22 per cent of BAE’s entire group sales and includes commercial and military customers.

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