Two of the country’s largest defense contractors announced Sunday that they have agreed to combine in an all-stock merger of equals: L3 Technologies Inc. (NYSE: LLL) and Harris Corp. (NYSE: HRS). The combined company, to be named L3 Harris Technologies, will become the sixth-largest U.S. prime defense contractor and one of the world’s 10 largest defense firms.

Current L3 shareholders will receive 1.3 shares of Harris common stock for each L3 share they own. Once the merger is accomplished, current Harris shareholders will own about 54% of the new company.

Harris CEO William M. Brown, who will become board chair and chief executive of L3 Harris, said:

This transaction extends our position as a premier global defense technology company that unlocks additional growth opportunities and generates value for our customers, employees and shareholders. … Integration planning is already underway, and from our extensive experience with integration, we are confident in our ability to realize $500 million of annual gross cost synergies and $3 billion of free cash flow by year 3.

L3 CEO Christopher E. Kubasik, who is pegged to be L3 Harris president and chief operating officer when the deal is done and move on to board chair a year later, said:

This merger creates greater benefits and growth opportunities than either company could have achieved alone. The companies were on similar growth trajectories and this combination accelerates the journey to becoming a more agile, integrated and innovative non-traditional 6th Prime focused on investing in important, next-generation technologies.

On a pro forma basis, the new company would generate about $16 billion in calendar year 2018 revenue, pretax earnings of $2.4 billion and free cash flow of $1.9 billion. L3 Harris is targeting free cash flow of $3 billion in its third year and $2 billion in share buybacks in the first 12 months after the deal closes. The merger is expected to close in mid-2019.

L3 makes a wide range of electronic, sensor and communications systems for military, homeland security and civil aviation. The company is also a prime contractor of aerospace systems, security and detection systems and pilot training.

Harris also provides communications systems and other electronics for military and civilian buyers. The company’s products are used in battlefield communications, GPS systems, air-traffic control and weather tracking, as well as by emergency first-response teams.

L3 shares traded up about 5.9% in Monday’s premarket to $207.26. The stock closed up about 0.4% on Friday at $195.78, in a 52-week range of $180.24 to $218.70. The 12-month price target on the stock is $245.00.

Shares of Harris traded up about 2.3% in Monday’s premarket at $158.42. The stock also closed up about 0.4% on Friday, at $154.87 in a 52-week range of $133.66 to $170.72. The 12-month price target on the stock is $185.55.

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