US defence contractor Harris has signed a definitive agreement to acquire Exelis in a cash-and-stock deal valued at approximately $4.75bn.

Exelis shareholders will receive $16.625 in cash and 0.1025 of a share of Harris common stock, based on the latter’s closing price as of 5 February, for each share of Exelis common stock.

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Following the transaction, Harris shareholders will own nearly 85% of the combined company, with the remaining 15% held by Exelis shareholders.

"The commitment to excellence and innovation that both companies share will significantly benefit customers and provide new opportunities for employees."

Harris chairman, president and chief executive officer William Brown said: "The combination of the two companies’ highly complementary core franchises creates a competitively stronger company with significantly greater scale.

"We are expanding in a market where we have decades of success and a workforce dedicated to providing our customers with innovative and cost-effective solutions for some of their most complex challenges."

Exelis chief executive officer and president David Melcher said: "Combining the companies not only creates shareholder value, but the commitment to excellence and innovation that both companies share will significantly benefit customers and provide new opportunities for employees.

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"Our 2014 was another strong year and we expect to report revenue of approximately $3.25bn and adjusted operating margin between 12.4% and 12.5%, which is in line with our previous guidance."

Having secured $3.4bn of fully committed bridge financing from Morgan Stanley Senior Funding, Harris intends to put in place permanent financing in the form of term loans and unsecured bonds, prior to closing.

Subject to customary closing conditions, including regulatory and Exelis shareholder approval, the transaction is expected to close in June of this year.

Headquartered in Virginia, Exelis manufactures electronic warfare systems, navigation equipment, air traffic management and communications systems for defence and aerospace sectors.

Harris supplies tactical radios to the US and allied forces.