British defense, aerospace and security company BAE Systems PLC said it agreed to purchase Rockwell Collins Aerospace & Electronics Inc.'s global positioning system business for about $1.93 billion and Raytheon's airborne tactical radios business for $275 million in all-cash transactions.
BAE Systems expects tax benefit of $365 million from the acquisition of the global positioning system business, while the purchase of airborne tactical radios business is expected to yield tax benefit of $50 million.
The company said it would raise new external debt to fund the acquisition from Rockwell Collins and use existing cash to fund the deal with Raytheon.
The closure of both transactions is subject to the completion of the merger between Raytheon Co. and United Technologies Corp. and customary regulatory conditions.
The two businesses, which will be integrated into BAE's electronic systems division, are expected to be immediately accretive to earnings and cash, and achieve return on invested capital that surpasses cost of capital in the first full year after the deal's closing.
BAE anticipates revenues of approximately $359 million and adjusted EBITDA of approximately $127 million from the global positioning system business in 2020, and revenue compound annual growth rate is expected to surpass 10% over the following four years.
In addition, the airborne tactical radios business is expected to yield revenues of approximately $125 million in 2019.