BAE Systems buys Collins Aerospace’s GPS unit from America’s United Technologies business for £1.7bn

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Defence giant BAE Systems buys Collins Aerospace GPS unit from America’s United Technologies for £1.7bn

  • BAE shares rose 2.9 per cent, up 17.8p to 642.4p in trading on Monday
  • Move comes just six months after United Technologies and Raytheon merged
  • The GPS business has designed military receivers for more than 40 years

By Sara Scarlett For Thisismoney.co.uk

Published: | Updated:

Defence giant BAE Systems has splashed out $2.2billion (£1.7billion) on a military global positioning systems and a tactical radio business.

The UK business said the deal for Collins Aerospace’s GPS business is $1.9 billion, with nearly £300million for Raytheon’s airborne radio division.

Shares rose 2.9 per cent, up 17.8p to 642.4p in early trading. 

The billion pound deal includes Raytheon’s airborne radio division

Bosses said: ‘These two proposed acquisitions represent a unique opportunity to purchase high quality technology-based businesses with market-leading capabilities and long histories of pioneering innovation in their fields.’ 

The move comes just six months after United Technologies, which owns Collins Aerospace, and Raytheon agreed a merger, creating a $120billion (£92.5 billion) business to challenge BAE’s dominance.

Monday’s deals came after regulators said that in order for the merger to complete, the companies would need to offload the divisions.

The GPS business has designed military receivers for more than 40 years, with 1.5 million units, and has a presence on 200 ground, 40 airborne and 40 weapons platforms, primarily with the US military.

Bosses said they believe the business will be ‘highly complementary to our priority growth area of precision guided munitions in our Electronics Systems division’.

This year, BAE Systems added they expect to hit revenues of $359million (£274million), with underlying profits of $127million (£98million) from the division. 

The proposed acquisition would be funded by new external debt.

The new radio business designs, manufactures and supplies ‘a broad range of mission-critical communication systems to the US department of defence, allied governments and large defence aircraft manufacturers’, BAE added.

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