Harris Corp. (NYSE: HRS) has agreed to sell its maritime energy communications business to global satellite services company SpeedCast International for $425 million in the military radio maker’s first divestiture since its August agreement with activist hedge fund Jana Partners.
This move is part of Harris’ larger effort examine non-core businesses and also lighten its debt load from the $4.75 billion acquisition of former competitor Exelis in May 2015, which credit rating agency Moody’s says was funded with $3.6 billion in debt.
Melbourne, Florida-based Harris sold its former aerostructures business inherited from Exelis for $215 million in April as part of that portfolio review and also offloaded the commercial healthcare division in July 2015 for an undisclosed sum.
Harris expects to close the sale of its CapRock Communications business in the first quarter of calendar year 2017 pending regulatory reviews and was scheduled to discuss the deal and financial results from its recently-completed first quarter with investors at 8:30 a.m. Eastern time.
The company reported $7.5 billion in its last fiscal year ended June 30 and has a market capitalization of $11 billion.
Harris announced in September the names of the two mutual board of directors appointments with investor Barry Rosenstein’s Jana fund, one of the 10 largest shareholders, and said it would continue the portfolio review.
Reuters first reported Harris’ efforts to divest CapRock Oct. 4 and said the company is also looking to sell its information technology services division along with other parts of its critical networks segment.
The sale of CapRock also lowers Harris’ exposure in an energy market that has seen oil prices hold lower on a global supply glut as the crude pricing benchmark in New York is down 44 percent over three years.
Declines in revenue from CapRock led Harris to cut FY 2016 revenue expectations in February and was followed by another sales outlook reduction later in May on a slowdown in demand across the Middle East.
Shares in Harris have added 2.9 percent since the year started and are up 12.4 percent over 12 months.
