Wärtsilä swoops on L3's marine electronics business

DECEMBER 17, 2014 — L-3 Communications (NYSE:LLL) says it has entered into a definitive agreement with Wärtsilä Corporation to sell its Marine Systems International (L-3 MSI) business. The transaction is anticipated to be completed in the second quarter of 2015, subject to customary closing conditions and regulatory approvals.

The transaction, with a base purchase price of €285 million, is subject to customary adjustments and an estimated reduction of €60 million for L-3 MSI employee pension-related liabilities to be assumed by Wärtsilä Corporation.

Headquartered in Hamburg, Germany, L-3 MSI is a sector within L-3's Electronic Systems business segment, primarily focused on the commercial ship industry. L-3 MSI is a turnkey supplier of complete electrical systems, as well as integrated navigation, automation, communications, and power and propulsion systems for all types of ships, including cruise liners, ferries, and offshore and specialty vessels.

L-3 MSI comprises various units, including SAM Electronics, Valmarine, Lyngsø Marine, Dynamic Positioning & Control Systems, Jovyatlas/Euroatlas, ELAC Nautik, FUNA and APSS.

Mr. Jaakko Eskola, Senior Executive Vice President & President, Ship Power, Wärtsilä Corporation commented: "By combining forces with L-3 MSI, we create a powerful electrical and automation business, which is unique in its sector competence and breadth of capabilities. The deal is fully in line with our growth strategy to become the leading provider of innovative products and integrated solutions in the marine and oil & gas industries. This enables us to have a dedicated focus on both markets with an industry leading portfolio that features solutions from both companies."

L-3 MSI is expected to generate sales of approximately €400 million with an operating margin of approximately 6.5% for the year ending December 31, 2014.

"This planned disposition of L-3 Marine Systems International to Wärtsilä Corporation demonstrates our ongoing focus on portfolio shaping as a key component of our strategy of bringing efficiencies and value to our core businesses," said Michael T. Strianese, L-3's chairman, president and chief executive officer. "As a turnkey supplier of a variety of sophisticated marine electrical and automation systems, with an outstanding workforce, MSI will complement and enhance Wärtsilä's strengths in this sector. At the same time, this sale will open up new opportunities for L-3 to further enhance our operations and focus on delivering innovative solutions in our core markets."

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