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L3Harris (LHX) Divests Business Segments for a Combined $1.45B
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L3Harris Technologies (LHX - Free Report) has recently completed the sale of its Military Training business to CAE Inc. (CAE - Free Report) and its Combat Propulsion Systems and related businesses to Germany-based RENK AG.
Notably, L3Harris divested its Military Training business for $1.05 billion in cash, whereas its Combat Propulsion Systems and related businesses were sold for about $400 million in cash.
Rationale Behind the Agreements
In recent times, the divestment of businesses in the defense space has become increasingly popular as it enables companies to increase focus on core businesses, eliminate redundancies, along with improving operational efficiency and cost structure. Furthermore, divestments have been pivotal for defense companies in order to focus on more profitable assets with higher returns and pave the way for better market opportunities.
Furthermore, due to the prolonged and ongoing COVID-19 pandemic, divestment activities have enabled companies to assertively streamline their portfolio of businesses, reduce debt and restructure supply-chain activities, which have been taking a major hit since the pandemic began.
How Will These Divestments Benefit L3Harris?
With its recent divestment announcements, L3Harris continues its strategy of focusing on growing its core businesses and technologies and reshaping its existing portfolio. Quantitatively, as of February 2021, the company has completed divestitures with a combined $1.4 billion of revenues for $2.5 billion in expected proceeds.
In the context of the latest two divestitures, L3Harris intends to use the $1.45-billion proceeds from the divestitures of its business segments and related businesses for share repurchases. This, in turn, might boost investors’ confidence in this stock.
Other Defense Majors Adopting Divestment Strategies
Considering the current volatile market situation on a global scale, there are quite a few defense players that have taken up divestment activities in recent times to boost their balance sheet.
At the start of February 2021, Northrop Grumman (NOC - Free Report) closed the sale of its IT services business to Peraton, an affiliate of Veritas, for $3.4 billion in cash. The divestment is in line with the company’s strategy of focusing on growing its core businesses, driving shareholder value and executing its capital allocation strategy.
In January 2021, Raytheon Technologies (RTX - Free Report) divested its cybersecurity subsidiary, Forcepoint, to private equity firm, Francisco Partners. The divestment offered Raytheon around $1.5 billion in gross proceeds.
Shares of L3Harris have gained 26.1% in the past year compared with the industry’s growth of 19%.
Image Source: Zacks Investment Research
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L3Harris (LHX) Divests Business Segments for a Combined $1.45B
L3Harris Technologies (LHX - Free Report) has recently completed the sale of its Military Training business to CAE Inc. (CAE - Free Report) and its Combat Propulsion Systems and related businesses to Germany-based RENK AG.
Notably, L3Harris divested its Military Training business for $1.05 billion in cash, whereas its Combat Propulsion Systems and related businesses were sold for about $400 million in cash.
Rationale Behind the Agreements
In recent times, the divestment of businesses in the defense space has become increasingly popular as it enables companies to increase focus on core businesses, eliminate redundancies, along with improving operational efficiency and cost structure. Furthermore, divestments have been pivotal for defense companies in order to focus on more profitable assets with higher returns and pave the way for better market opportunities.
Furthermore, due to the prolonged and ongoing COVID-19 pandemic, divestment activities have enabled companies to assertively streamline their portfolio of businesses, reduce debt and restructure supply-chain activities, which have been taking a major hit since the pandemic began.
How Will These Divestments Benefit L3Harris?
With its recent divestment announcements, L3Harris continues its strategy of focusing on growing its core businesses and technologies and reshaping its existing portfolio. Quantitatively, as of February 2021, the company has completed divestitures with a combined $1.4 billion of revenues for $2.5 billion in expected proceeds.
In the context of the latest two divestitures, L3Harris intends to use the $1.45-billion proceeds from the divestitures of its business segments and related businesses for share repurchases. This, in turn, might boost investors’ confidence in this stock.
Other Defense Majors Adopting Divestment Strategies
Considering the current volatile market situation on a global scale, there are quite a few defense players that have taken up divestment activities in recent times to boost their balance sheet.
At the start of February 2021, Northrop Grumman (NOC - Free Report) closed the sale of its IT services business to Peraton, an affiliate of Veritas, for $3.4 billion in cash. The divestment is in line with the company’s strategy of focusing on growing its core businesses, driving shareholder value and executing its capital allocation strategy.
In January 2021, Raytheon Technologies (RTX - Free Report) divested its cybersecurity subsidiary, Forcepoint, to private equity firm, Francisco Partners. The divestment offered Raytheon around $1.5 billion in gross proceeds.
Zacks Rank & Price Performance
L3Harris carries a Zacks Rank #3 (Hold), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of L3Harris have gained 26.1% in the past year compared with the industry’s growth of 19%.
Time to Invest in Legal Marijuana
If you’re looking for big gains, there couldn’t be a better time to get in on a young industry primed to skyrocket from $17.7 billion back in 2019 to an expected $73.6 billion by 2027.
After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could be a still greater bonanza for investors. Even before the latest wave of legalization, Zacks Investment Research has recommended pot stocks that have shot up as high as +285.9%
You’re invited to check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.
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