UPDATE 1-Harris, L3 Technologies near agreement to merge -source

(Adds background on the companies)

Oct 13 (Reuters) – U.s. defense communications companies Harris Corp and L3 Technologies Inc are nearing an all-stock merger deal that would create a company with a market value of more than $33 billion, a person familiar with the matter said on Saturday.

The deal would be the latest example of how increased defense spending under U.S. President Donald Trump and the Republican Party is driving contractors to pursue mergers for more scale to bid on bigger projects, spanning from outdated computer systems to cyber security.

The transaction, expected to be presented as a merger of equals, could be announced by Monday, the person said. Harris and L3 have market capitalizations of $18.2 billion and $15.3 billion, respectively.

The source asked not to be identified because the negotiations are confidential. Harris and L3 did not respond to requests for comment. The potential deal was first reported by the Wall Street Journal.

Harris, based in Florida, makes communications and electronics for battlefields, weather reporting and air traffic control. L3, based in New York, makes communications and electronics for the military, aviation, homeland security and others.

A string of deals have taken place in the sector. In June, U.S. defense contractor Northrop Grumman Corp acquired Orbital ATK for about $7.8 billion, giving it greater access to lucrative government contracts and expanding its arsenal of missile defense systems and space rockets.

In April, weapons maker General Dynamics Corp bought CSRA Inc for $9.7 billion to expand its government services business, after CACI International Inc withdrew its offer for CSRA following a bidding war.

(Reporting by Gregory Roumeliotis in New York and Timothy Gardner in Washington Editing by Leslie Adler and Richard Chang)

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