Acquisition

Leidos expands its global security footprint to 75 new countries

Leidos took a significant step toward expanding its global airport and critical infrastructure footprint with its entrance into a definitive agreement to acquire L3Harris’ airport business.

The deal to buy L3Harris’ security detection and automation businesses for $1 billion in cash will allow Leidos to offer a more “comprehensive security and detection platform” to global customers.

Over 20,000 of L3Harris’ security checkpoint offerings, which include checkpoint scanners, automated tray return systems and explosives trace detectors, are deployed across 100 countries, according to a Feb. 4 news release. The deal, expected to close at the end of the second quarter of 2020, will expand Leidos’ work in 75 new countries, according to a statement from Leidos Chairman and CEO Roger Krone.

The L3Harris business serves government, critical infrastructure, aviation and transportation. A Leidos spokesperson said that the acquisition will produce about $500 million in revenue in 2020.

“The addition of this technology to the Leidos portfolio will enhance the company’s offerings in a global security product market projected to grow in excess of the federal budget,” the Leidos news release said.

The acquisition is a significant step forward for Leidos’ goal of increasing the company’s presence in international markets and diversifying its revenue. The move will also increase Leidos’ revenue from international security products sixfold, the release stated.

The spokesperson declined comment on specific opportunities the acquisition provided, but said the deal will make the company “more competitive.”

“We also believe there are opportunities to grow the services portion of the acquired businesses by servicing more of the equipment ourselves, and improving service quality and efficiency for customers,” the spokesperson said

Leidos currently provides several aviation products including airport operations, planning and management systems, as well as inspection systems, which the L3Harris technology will complement. The deal will also bolster its global border and port sales channel business.

According to USAspending.gov, Leidos has won $6.7 billion in federal business in the last 12 months, with the Department of Defense and Department of Health and Human Services both spending over $1 billion each with Leidos.

At the end of January, the Federal Aviation Administration awarded Leidos a prime contract, potentially worth $450 million over 12 years to modernize an FAA radar system.

Leidos reported an annual revenue of $10.19 billion for fiscal 2018.

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