L3Harris Technologies [LHX] on Monday said it has agreed to sell its Commercial Aviation Solutions (CAS) to the private equity firm TJC L.P. for $800 million, which includes $700 million in cash and a potential $100 million earnout provision based on achieving certain performance targets in 2023 and 2024.
The pending sale, which is subject to regulatory approvals and is expected to close in the first half of 2024, is in line with L3Harris’ strategy to focus on its national security business. The company’s top priority for its cash is repaying debt, particularly that with higher interest rates.
“Aligned with our capital allocation priorities, we plan to use the proceeds from this transaction to repay debt, which will accelerate our timeline to reach our debt leverage objective,” Christopher Kubasik, chairman and CEO of L3Harris, said in a statement.
L3Harris said the deal also includes the sale of its surveillance joint venture and is subject to a right of first refusal.
The CAS business has about 1,450 employees and two operating units, Avionics and Commercial Training Solutions. The business serves more than 160 different aircraft platforms in the commercial, business and regional jet, and military end markets.
The CAS business designs and manufactures avionics for commercial, unmanned, and military applications, develops flight simulators and training systems for commercial aircraft, offers flight data analytics, and provides commercial pilot training services. Customers include commercial airlines, aircraft manufacturers, and foreign militaries.
L3Harris’ financial advisers on the deal are
Morgan Stanley & Co. and Moelis & Co. TJC’s financial adviser is Morgan Securities LLC.