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Honeywell sells TCAS
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March 13, 2000: 12:43 p.m. ET
L-3 buys aircraft collision avoidance system in $255M deal
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NEW YORK (CNNfn) - Aviation equipment provider L-3 Communications said Monday it planned to buy Honeywell International's Traffic Alert and Collision Avoidance System (TCAS) for $255 million in cash.
Acquiring the TCAS, an airborne collision avoidance system used by most airlines and the military that automatically alerts pilots about other nearby aircraft, will help L-3 compete with Honeywell and Rockwell International (ROK: Research, Estimates), the two leaders in aviation equipment, said Frank Lanza, L-3's chief executive officer.
L-3 also announced a deal in which it would allow another competitor, Sextant, to acquire a 30 percent stake in TCAS once the deal with Honeywell is completed in about a month, Lanza said. The agreement will help L-3 better market the system overseas.
The news did little to help L-3 Communications (LLL: Research, Estimates) stock, which was down 9/16 to 44 in early afternoon trading Monday. With annual revenue of $100 million, L-3 provides aircraft communications equipment -- including voice and data recorders -- to such clients as Northwest Airlines, Federal Express, British Airways, Alaska Airlines and Swissair.
"TCAS significantly broadens our growing commercial transportation business and allows us to further leverage the strong existing relationships we have built with our aviation recorder customer base," Lanza said in a prepared statement.
Honeywell Inc. sold its TCAS unit after federal antitrust regulators reviewing the $14 billion merger of Honeywell International and AlliedSignal said retaining the unit would be anti-competitive, Lanza said. The combined companies operate from Morristown, N.J.
Shares of Honeywell (HON: Research, Estimates) fell 1-1/16 to 44-5/16 Monday afternoon. 
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