Moody's affirms Harris

Moody's Investors Service said it affirmed the Baa1 long-term debt rating and P-2 short-term rating of Harris Corp. following the company's announcement that it plans to purchase the Tyco Electronics Wireless Systems business from Tyco Electronics Ltd. for about $675 million in cash.

The outlook remains stable.

The agency said this acquisition is a reasonable extension of Harris's existing communications business and consistent with its strategies of expanding to addressable markets and transferring technologies to win new customers.

Cash on hand and the expected free cash flow over the coming year should be sufficient to cover the entire purchase price, Moody's said, but the agency expects Harris will issue debt to fund a large portion of the purchase price and continue its share repurchase activity at a moderate pace that can be funded within free cash flow.

Pro forma for the new debt and the acquired cash flow, the debt-to-EBITDA ratio will be less than 2 times, the agency said.

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