L3 Technologies and Harris Corporation rallied on Oct. 15, 2018, after the two companies agreed to merge in an all-stock deal. The new company will have a market capitalization of $33.5 billion, making it the sixth-largest defense company in the US, according to the company release.
Following the news, L3 Technologies climbed 9.8% and Harris Corporation jumped 8.6%.
Under the terms of the merger agreement, each L3 Technologies shareholder will receive 1.30 Harris Corp shares for each L3 share they owned, the company said. After completion of the deal, Harris shareholders will own approximately 54% of the company while L3 shareholders will own the remaining 46%.
The combined company, called L3 Technologies, is expected to generate net revenue of approximately $16 billion, earnings before interest and taxes of $2.4 billion, and free cash flow of $1.9 billion. The company will employ 48,000 people and will have its headquarters in Melbourne, Florida, where Harris is based.
The all-stock deal will create the country's sixth-largest defense contractor.
"This merger creates greater benefits and growth opportunities than either company could have achieved alone," said Christopher E. Kubasik, L3 chairman, president and chief executive officer.
"The companies were on similar growth trajectories and this combination accelerates the journey to becoming a more agile, integrated and innovative non-traditional 6th Prime focused on investing in important, next-generation technologies."
This article originally appeared on Business Insider. Follow @BusinessInsider on Twitter.
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