Harris to buy Schlumberger satellite unit

NEW YORK (BestGrowthStock) – Communications equipment maker Harris Corp (HRS.N: ) will pay $397.5 million in cash for the satellite communications unit of oil field services company Schlumberger Ltd (SLB.N: ), Harris said on Monday.

The deal marks a further push into the energy market for Harris, a provider of gear for the military and government agencies, following its July purchase of CapRock communications.

The Schlumberger Global Connectivity Services unit provides communications services mainly to the oil and gas industry, including to Schlumberger. Harris estimates the unit will post 2010 operating earnings of $41 million on sales of about $170 million. Its sales were down slightly from 2008 and 2009, partly reflecting a moratorium on drilling in the Gulf of Mexico following BP Plc’s (BP.L: ) oil spill.

The deal follows Harris’s July purchase of privately held CapRock Communications, a provider of Internet, video and voice communications for energy, government and shipping industries. That $525 million cash deal marked Harris’ entry into the energy sector.

Worldwide demand for commercial satellite services is expected to reach $8 billion a year within five years. Government, energy and maritime markets account for about a third of the total and Harris forecast about a 20 percent market share in those segments.

The deal, expected to close in the first calendar quarter of 2011, will have minimal impact on Harris’s fiscal 2011 earnings and should add to earnings from 2012, Harris said.

Although the company has done two deals in quick succession, it could not rule out further acquisitions, Harris Chief Executive Howard Lance told analysts on a conference call.

The Schlumberger GCS unit has relatively little exposure to North American markets so its purchase should not raise U.S. antitrust issues, said CFO Gary McArthur.

Harris shares were down 40 cents at $46.93, while Schlumberger was down 96 cents at $74.69, both on the New York Stock Exchange.

(Reporting by Nick Zieminski, editing by Gerald E. McCormick)

Harris to buy Schlumberger satellite unit