Harris (HRS), a maker of U.S. military communication devices is buying aerospace company Exelis (XLS) in a deal valued at $4.75 billion. Shares of both stocks are up on the M&A news with Exelis exploding 35% higher. Lou Whiteman follows the space for The Deal and says to expect more of this activity to follow. 'Buyers finally have enough confidence in defense spending to commit capital, but there isn't enough growth in the budget for everyone to outperform so some companies are going to look to sell', he says. But despite the squeeze, larger defense companies like Lockheed Martin (LMT) have done well, up almost 30 percent in a 52-week period. As far as other middle market companies, Whiteman is keeping a close watch on L3 Communications (LLL) and Flir Systems (FLIR).