Wednesday, May 06, 2015 9:06:44 AM
May 06, 2015 06:30:00 (ET)
By Doug Cameron
Exelis Inc. on Wednesday reported forecast-beating quarterly profit and higher sales, removing another impediment to its planned takeover by Harris Corp. in what would be the largest U.S. defense acquisition in two decades.
The lack of negative surprises by Exelis, a specialist in night-vision goggles, communication systems and air-traffic control equipment, was viewed by analysts as a positive for the planned creation of a top-10 U.S. Pentagon supplier by sales.
Harris on Tuesday detailed lingering antitrust issues over the planned deal, with talks continuing with the Justice Department over control of intellectual property on future Army radio contracts. The company doesn't expect to have to make any asset disposals to satisfy antitrust requirements, though analysts suggested it may have to hand over some IP to the Pentagon ahead of the planned Army radio deal.
Exelis shareholders are due to vote on the cash-and-stock transaction on May 22, with Harris still expecting to close a deal in June, in line with the timetable when the transaction was announced in February.
Exelis, based in McLean, Va., reported profit of $59 million in the first quarter, up from $52 million a year earlier, with per-share earnings from continuing operations rising to 31 cents, four cents above analyst expectations.
Earnings beats in the aerospace and defense sector this quarter have received a muted reception from investors, who have reversed part of the rotation into military stocks that were perceived to have less exposure to currency and energy-market risk than other industrial companies.
Exelis shares are up 40% this year, compared with a 2% gain in the broader U.S. defense sector, while Harris shares have climbed 10%.
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(END) Dow Jones Newswires
May 06, 2015 06:30 ET (10:30 GMT)
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