January 20, 2020 / 7:36 AM / a month ago

UPDATE 1-BAE Systems spends $2.2 bln on U.S. electronic systems units

(Adds detail, background)

LONDON, Jan 20 (Reuters) - British defence company BAE Systems said it would spend $2.2 billion to help grow its U.S.-based Electronic Systems business, picking up two units being offloaded as a result of the merger of U.S. rivals Raytheon and United Technologies.

BAE Systems said the acquisitions, of a military-focused GPS unit from Collins, part of United Technologies Corp and an airborne tactical radios unit, owned by Raytheon, were dependent on the closure of the pair's merger.

Charles Woodburn, chief executive of BAE Systems, said the company was benefiting from the merger's requirement for some assets to be divested in order to win regulatory clearance.

"It's rare that two businesses of this quality, with such strong growth prospects and close fit to our portfolio, become available," he said in a statement on Monday.

Last June, United Technologies agreed to combine its aerospace business with U.S. contractor Raytheon to create a company worth about $121 billion.

BAE said it had entered into an agreement to buy Collins Aerospace's Military Global Positioning System for $1.925 billion in cash.

A separate agreement would see it buy Raytheon's Airborne Tactical Radios business for $275 million, also in cash.

The larger deal would be funded by new external debt and the smaller from existing cash, with both immediately earnings accretive. Both would also provide BAE with tax benefits of $365 million and $50 million respectively.

The UTC-Raytheon merger is expected to be completed in the first half of 2020. (Reporting by Sarah Young, Editing by Paul Sandle)

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