Harris Corp. (HRS) said Monday it has agreed to buy Schlumberger
Ltd.'s (SLB) satellite communications services business for $397.5
million.
The unit, which primarily serves the oil and gas industry, will
be combined with CapRock, the satellite-communications provider
Harris bought for about $525 million in July. Harris is expanding
its satellite business to focus on such customers as the government
and companies in the energy and maritime sectors, which operate in
remote and harsh environments.
Meanwhile, Harris--best known for its digital multiband
radios--has shown strong earnings growth of late, helped by sales
to the U.S. Defense Department as the Pentagon seeks to save money
by using cheaper off-the-shelf technology that has already been
tested in commercial markets.
The Schlumberger deal is expected to have minimal impact on
Harris' adjusted earnings on the fiscal year ending July 1 and add
slightly to the bottom line the following year. But thereafter,
Harris anticipates the business being a "significant contributor to
earnings and growth."
The deal is expected to close in the third quarter of next year.
Harris plans to finance it with cash, commercial paper, borrowings
under its committed credit facilities and long-term debt.
Harris shares closed Friday at $47.33 and were inactive
premarket. The stock is down 0.5% this year.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com