Defense News quotes M.A. and George Lund Fellow for Emerging Defense Challenges Steven Grundman on American radio-maker Harris’s acquisition of Exelis last week:
“There were no show-stoppers in the government’s merger review that I could see,” said Steven Grundman, a former Pentagon Industrial Policy Chief and now the Principal of Grundman Advisors.
“As similar-looking as these companies may have been, their offerings and capabilities are more complementary than overlapping.”
Harris will benefit from incorporating experienced engineers and project managers from Exelis, but it is difficult to quantify how much value these additions will generate, Grundman said.
“Particularly at this advanced stage in the downturn of defense spending, there’s not a lot of headcount slack in defense companies,” he said. “Together, they now really do have a full scope of command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) capabilities. Independently, each had some holes in its respective ability to address C4ISR opportunities. Having said that, it’s maddeningly hard to know the value of such economies of scope, though I’m certain there is some.”