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October 21, 2018 | International, Aerospace, Naval, Land, C4ISR, Security

CEO Q&A: L3’s Chris Kubasik and Harris’s Bill Brown

BY MARCUS WEISGERBER

Soon after the companies announced plans to form the world's 7th-largest defense firm, the CEOs rang up for a joint interview.

On Sunday, just after L3 Technologies and Harris Corp. announced their planned merger next year, I chatted with CEOs Chris Kubasik and Bill Brown about their plans to form L3 Harris Technologies, which would be the world's 7th-largest defense firm. Here are some excerpts.

Q. How did this come together?

Brown: Chris and I have known each other for a number of years here, and a lot of it started more socially, not from a business perspective. We work in the same space as complimentary businesses, complementary portfolios. Same [main] customer. You know we realized, given where we stack up in the defence hierarchy, this would be a great potential combination. We've been discussing it through the balance of this calendar year. [It] really picked up steam in the summer and were able to bring it forward here towards middle October.

Q. Why a merger rather than an acquisition by one partner?

Kubasik: Both companies are quite strong, and we're both on an upswing, and we looked at all the different stakeholders from the customers, the shareholders and the employees. And in our relative size and market value, a merger vehicle seems to be the absolute right way to go here. True partnership, as you've probably seen. 50/50 board. Bill and I have our leadership laid out clearly. It's absolutely the right way to do this. We're quite proud that we're able to pull it off. And I think it's the best way to serve all the stakeholders.

Q. Bill is going to be CEO until a transition to Chris in a couple of years. How will that work? And what happens to L3's New York office if the headquarters moves to Florida?

Brown: The combination in bringing these two great companies together is going to take a lot of work. So Chris and I will partner on this, in leading the company [and] clearly doing a lot of the integration. We're going to chair the integration committee together. I'll have responsibility for the enterprise functions, and Chris will keep an eye on the ball in what we do operationally in the business segments making sure that through to the integration we don't miss a beat in our growth agenda, meeting expectations of customers, delivering on programs. It's going to be a shared partnership in bringing the companies together.

Kubasik: On a combined basis, we have several thousand employees in the state of New York, a lot in Rochester, of course Long Island and the surrounding areas. We got to do to what we believe is best for the business. When you look at the Space Coast of Florida, the 7,000 or so employees and infrastructure in the Melbourne area, it's an easy decision. We'll be transitioning from the headquarters from New York and taking the best of the best and moving to Florida. At some point the Manhattan office will either be significantly scaled down or ultimately closed.

Q. Will the combined company divest or combine overlapping sectors?

Bill Brown: Very high and complimentary portfolios. So we see very, very, very little overlap.

Q. L3 has been on an acquisition spree in recent years. Should we expect more, perhaps in the maritime sphere?

Kubasik: Job one is going to be the integration for the first couple years, so there will be very, very few, if any, acquisitions the first couple of years. They would have to be a once-in-a-lifetime opportunity. We're going to focus first and foremost on integrating this company. Once we get this integrated, which is a three-year program, we'll update and modify the strategy as appropriate.

Correction: An earlier version of this article misstated the proposed merged company's rank by revenue among global defense firms.

This Q&A is part of the weekly Global Business Brief newsletter by Marcus Weisgerber. Find the rest of this week's issue here,and subscribe to get it in your inbox, here.

https://www.defenseone.com/business/2018/10/q-ceos-chris-kubasik-and-bill-brown-l3-technologies-and-harris-corps/152135

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