Leidos remains convinced L3Harris Technologies' security detection and automation businesses will provide growth, despite the potential for travel slowdowns related to the coronavirus.
Last month, Leidos agreed to buy the units for $1 billion in cash. The businesses provide screening products, automated tray return systems and other industrial automation technology for airports and critical infrastructure. The deal is set to close in June.
In an interview with Inside Defense last week, Roger Krone said Leidos has its own security products and inspection business, which was more focused on ports and borders than airport checkpoints.
Leidos had come to think that the business was not large enough and "probably needed to be a buyer or a seller," Krone said.
"But until one of the other companies decides that they want to sell, it's hard to be a buyer," he added.
Krone said he remains convinced long-term challenges, such as terrorism, will drive growth in the business, even as air travel dries up in the wake of the coronavirus. He noted, however, that the security business is not perfectly correlated to air traffic.
“We like the business because we thought long-term it was a good growth business,” he said. “We still feel that way and we're still comfortable with where we are. The business plan -- we haven't changed anything, we haven't changed our forecast, but it's something we will continue to think through in the next weeks and months.”