(Adds CEO comments from conference call)
Feb 28 (Reuters) - CAE Inc CAE.TO will buy L3Harris Technologies Inc's LHX.N military training division for $1.05 billion in the company's largest-ever deal, boosting its defense business at a time when the pandemic is weighing on civil aviation.
The deal will double the aviation training specialist's defense business in the critical U.S. market, Chief Executive Marc Parent told analysts on Monday.
News of the deal sent shares of CAE, which also makes full flight simulators, up more than 10% in morning trade in Toronto.
"When you look at the size of the critical mass that we have, there's no exaggeration here that there is no program in the United States or opportunity that we can't go after," Parent said.
Revenues will be split approximately evenly between defence and civil after the deal closes, as expected, in the second half of 2021.
During CAE's fiscal 2020 year, defence and security accounted for 37% of earnings.
The deal increases the development of training systems for fighter and bomber aircraft, submarines and remotely piloted aircraft.
The world's largest civil aviation training company expects the deal to add to earnings in the first full year after closing and projected annual cost savings of about C$35 million ($27.57 million) to C$45 million after the second year. CAE, which produces flight simulators for Boeing (NYSE:BA) Co BA.N and Airbus AIR.PA , posted a 50% slump in third-quarter profit but expects to see an uptick in training contracts as more people resume air travel following vaccinations. deal will be funded by a private placement of roughly C$700 million from two institutional investors, CAE said. second-largest pension fund Caisse de dépôt et placement du Québec (CDPQ) said it would invest C$475 million in the deal, becoming CAE's largest shareholder. deal, the training division will be based in Tampa, Florida. The deal was earlier reported by the Wall Street Journal.
($1 = 1.2696 Canadian dollars)