BAE to buy two electronics assets for $2.2bn

BAE Systems said it was spending $2.2bn on two electronics assets being sold as part of the Raytheon and United Technologies merger in the US.

The company on Monday said it was buying Collins Aerospace's Military global positioning system (GPS) business for $1.925bn (£1.48bn) and Raytheon's airborne tactical radios business for $275m.

The company on Monday added that the Collins and Raytheon deals would produce tax benefits of $365m and $50m respectively.

Both deals were expected to be immediately earnings and cash flow accretive. BAE said it was buying the Collins asset with new debt and the Raytheon's radio assets with existing cash.

Chief executive Charles Woodburn said the strategic and financial rationale for the deals was “strong” and they would “enhance the group's opportunity for continued growth in electronic systems”.

“It's rare that two businesses of this quality, with such strong growth prospects and close fit to our portfolio, become available,” he said.