L3Harris: A Most Peculiar Reorganization

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It has come to my attention, and I daresay it’s a bit of a rummy business, that L3Harris – a firm previously known for constructing things that go whoosh – is undergoing a reorganization of a positively bewildering nature. One might almost suspect a committee of particularly absent-minded professors were in charge, but let’s not jump to conclusions. It began, you see, with a spot of tinkering – a decision to streamline their operations, reducing four divisions to a mere three. A sensible enough notion, one would think, until one delves into the details, which are, frankly, a bit like untangling a plate of spaghetti.

These new divisions, you understand, are ‘Space and Mission Systems’ (dealing with satellites and all that high-falutin’ stuff), ‘Communications and Spectrum Dominance’ (which sounds terribly impressive, doesn’t it?), and ‘Missile Solutions’ (rather self-explanatory, really). Perfectly respectable titles, all of them. But the plot, as they say, thickens faster than a particularly rich custard.

For scarcely a day had passed before L3 announced that a private equity firm – AE Industrial Partners, a name that suggests a fondness for both machinery and vigorous negotiation – would be acquiring a substantial 65% stake in their ‘space propulsion and power systems business’. This, it appears, is the old Aerojet Rocketdyne division, now reverting to its historic name, Rocketdyne. They’ve been building rocket engines for sixty years, the chaps, and rather good ones at that. L3 will retain a smattering of shares, but the general impression is that this particular engine room is being handed over to new management. A bit like selling the family motorcar, wouldn’t you say?

The Second Shoe Drops, or, A Most Unexpected Turn

But hold on, things are about to get even more convoluted. Just this week, L3Harris unveiled a scheme that can only be described as a bit of a lark. They’ve entered into a partnership – a “first-of-its-kind” one, no less – with the Department of War (as President Trump rather colorfully dubbed the Department of Defense). The plan? To accept a billion-dollar investment, in the form of preferred stock, into their ‘Missile Solutions’ business. A rather substantial sum, wouldn’t you agree?

This investment is expected this quarter, and then – brace yourselves – ‘Missile Solutions’ will be spun off as a separate company, to be unleashed upon the stock market in the latter half of 2026. After the initial public offering, the Department of Defense will convert its preferred stock into common stock. It’s all rather complicated, but the gist of it is that L3Harris is creating a new entity dedicated solely to the construction of things that go bang. A specialized operation, you might say.

To be perfectly clear, we’re dealing with two separate businesses here. Rocketdyne, building engines for peaceful endeavors, and ‘Missile Solutions’, building… well, let’s just say they cater to a different clientele. And it appears L3Harris is determined to shed both, leaving them rather like a chap who’s trimmed his beard down to a stylish stubble.

Indeed, the CEO, Mr. Christopher Kubasik, has confirmed that once ‘Missile Solutions’ goes public, it will be a “pure-play missile solutions provider” with a mission to be part of America’s “Arsenal of Freedom.” A rather dramatic pronouncement, don’t you think? One almost expects a fanfare and a parade.

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What Does It All Mean for the Investor, Poor Soul?

So, what’s the upshot for the investor, who, let’s face it, is often rather bewildered by these corporate shenanigans? Well, it appears that an investment in L3Harris today could, in a few months’ time, mean owning shares in three separate companies. A bit like buying a fruitcake and discovering it contains a plum pudding and a slice of Victoria sponge. One must be careful, you see.

One company will be Rocketdyne, building engines for rockets that go up, up, and away. Another will be ‘Missile Solutions’, building things that go boom. And the third will be what remains of L3Harris, focusing on ‘Space and Mission Systems’ and ‘Communications and Spectrum Dominance’. A leaner, more streamlined operation, one hopes.

It’s not entirely clear at this stage how large each of these businesses will be, or which product lines they’ll retain. However, a bit of digging reveals that Rocketdyne and ‘Missile Solutions’ are likely to divide up approximately $9.3 billion in annual revenue and a little over $1.1 billion in operating profit. The remaining L3Harris will keep around $12.3 billion in business, with about $2.2 billion in operating profit. All in all, L3Harris should emerge from this restructuring smaller, but considerably more profitable, having shed its engine-building appendages.

Keep a watchful eye on the details as they become clearer, but for now, my hunch is that this reorganization will make L3Harris stock a rather more attractive proposition. A bit like polishing a perfectly good apple, wouldn’t you say? A dash more appealing, and decidedly worth a closer look.

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2026-01-25 13:33