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October 15, 2018Loren B. Thompson, Ph.D

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L3-Harris Merger May Signal Pentagon Demand Is Approaching Peak (From Forbes)

October 15, 2018Loren B. Thompson, Ph.D

Harris Corporation and L3 Technologies announced this weekend that they will enter into a “merger of equals” creating the sixth biggest U.S. military contractor. The transaction appears to raise minimal antitrust concerns, but the timing suggests defense companies are beginning to react to the prospect of flat domestic demand going forward. They have benefited handsomely from the Trump defense increases, but Pentagon outlays are expected to increase by no more than the rate of inflation through 2023. With chances for organic growth receding after 2020, mergers and acquisitions are becoming the only sure-fire way to gain market share. I have written a commentary for Forbes here.

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