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12 Jul 18. L3 acquires two information security firms with eye toward multiple markets. L3 Technologies on Wednesday acquired two information security companies, Azimuth Security and Linchpin Labs. The acquisitions are expected to strengthen L3′s C4ISR, cyber defense and combat systems businesses. The acquired companies, which will become L3 Trenchant, were purchased for approximately $200m. But “the purchase price is subject to an upward adjustment of up to AUD$43m (approximately USD$32m), payable in L3 common stock,” according to an L3 news release. This depends on post-acquisition sales from June 30, 2019, to 2021. The acquisition follows L3′s $540m sale of Vertex in May.
“These acquisitions sharpen our capabilities, heighten our responsiveness and advance L3’s prime position as a C6ISR solutions provider,” said Christopher E. Kubasik, L3’s chairman, president and CEO. “We are making targeted investments in cutting-edge technologies and integrating them with existing capabilities to support our domestic and international customers in strategically important business areas.”
In a previous interview with Defense News, Kubasik said the company’s acquisition strategy is based on addressing strategic needs and capability gaps. “In several cases after discussions with our customers and looking at the National Defense Strategy, we’re looking for different technologies and capabilities” he said. ” We look at our strategy, we go out and find things to fill the gaps.”
Some of the gaps L3 is looking to fill in the U.S. and overseas are related to underwater unmanned vehicles as well as intelligence, surveillance and reconnaissance platforms. Kubasik said he hopes to capitalize on increased interest in sensor and communication technologies.
“Internationally, we visited customers in Taiwan, Japan, Singapore, Saudi Arabia and the United Arab Emirates,” he said. “There is a lot of entrants, especially in the Mideast for ISR platform[s]. … And of course that’s in our sweet spot.”
Canada-based Linchpin Labs specializes in custom software development and brings experience working with government clients on computer network operations, cross-platform and low-level systems development, and information technology services. Based in Sydney, Australia, Azimuth Security is an information security consultancy firm that focuses on in-depth software analysis, including threat modeling and design, configuration, and source-code review.
“These pioneering intelligence solutions — the ‘I’ in ISR — give our customers an intelligence advantage through next-generation network security and threat mitigation,” said Jeff Miller, L3’s senior vice president and head of the firm’s sensor systems unit. (Source: Defense News)
12 Jul 18. Governments receive plans for industrial tie-up between Fincantieri, Naval Group. France and Italy received in June plans for industrial cooperation from shipbuilders Fincantieri and Naval Group, the spokeswoman for the French Armed Forces Ministry said.
“The governments concerned received the proposals from the companies and these proposals are being studied,” Valérie Lecasble said July 12, replying to a question from Defense News.
That delivery last month met a timetable for the Italian and French shipbuilders to pitch their plans for an industrial alliance in building warships and cooperating in export sales. Submarines are excluded from that proposed cooperation. Naval Group is pursuing that link up with “great determination,” a company spokesman said. Meanwhile, a 36-page report from ADIT, a partially state-owned company working in economic intelligence, has painted a “highly negative” picture of the compliance and ethics of Fincantieri, business paper La Tribune reported July 12. That ADIT report is circulating in the French Economy and Finance Ministry and the offices of the Armed Forces Minister, the report said. There is also a report from the DGSE foreign intelligence service that cites “doubtful practices” Fincantieri’s commercial matters. That DGSE report has been handed to the French prime minister’s office, as well as the two French ministries. The business model for the proposed Franco-Italian deal is seen by Naval Group as similar to the partnership between French carmaker Renault and its Japanese ally Nissan, in which there is close cooperation but the two are separate companies. That proposed cross-border collaboration would seek synergies by pooling research, development and the procurement of equipment, and by cooperating on export offers in a bid to cut competition between the two companies. There would also be a cross shareholding of some 10 percent between the two companies. It remains to be seen how the two partners have brought into the plan the French and Italian systems companies Thales and Leonardo, respectively, which supply electronics for warships. Thales holds a 35 percent stake in Naval Group, with the majority of the remainder owned by the French state. (Source: Defense News)
12 Jul 18. U.S. government contractor Engility explores sale: sources. U.S. defence contractor Engility Holdings Inc is exploring a sale, amid a wave of consolidation in the U.S. government services sector, three people familiar with the matter said on Wednesday. The development is the latest example of how increased defence spending under U.S. President Donald Trump and the Republican Party is driving contractors to pursue mergers so that they have more scale to bid on bigger projects, spanning everything from outdated computer systems to antiquated cyber security. Engility has attracted interest from companies that include CACI International Inc and Science Applications International Corp (SAIC), though deliberations are at an early stage and may not lead to a deal, two of the sources said. The sources asked not to be identified because the talks are confidential. Representatives from Engility and CACI did not immediately respond to a request for comment. A SAIC representative declined to comment. Chantilly, Virginia-based Engility provides skilled personnel to U.S. departments of defence, homeland security and justice, among others. It has a market capitalization of $1.2bn (£1bn). Engility is no stranger to dealmaking. It acquired privately held peer TASC for about $1.1bn, including debt, in 2014. At the time, TASC was controlled by private equity firms KKR & Co Inc and General Atlantic LLC, who took Engility shares as well as seats on Engility’s board as a part of the deal. KKR and General Atlantic now own close to half of Engility. In April, weapons maker General Dynamics Corp bought CSRA Inc for $9.7bn to expand its government services business, after CACI withdrew its offer for CSRA following a bidding war. Beyond General Dynamic’s purchase of CSRA, many companies in the government services sector have struck deals this year, including DXC Technology Co, which combined its U.S. public-sector business with Vencore Holding Corp and KeyPoint Government Solutions to create an independent, publicly traded company serving U.S. government clients. (Source: Reuters)
11 Jul 18. Private equity takes stake in BIRD Aerosystems. Israeli private equity firm FIMI. Opportunity Funds has reportedly signed an agreement to acquire a 50% stake of airborne surveillance and missile protection systems firm BIRD Aerosystems. The stake was valued at USD40m, according to Israeli business newspaper Globes, and confirmed by a BIRD Aerosystems spokesperson. In comments to Globes, FIMI executives highlighted the potential market growth for BIRD Aerosystems as well as the opportunities provided by the investment to help the company increase its market share as reasons for their investment. BIRD Aerosystems develops, manufactures, and integrates a range of surveillance, self-defence, and mission management tools for use on aircraft and vehicles.(Source: IHS Jane’s)
11 Jul 18. Aptiv acquires Winchester Interconnect. Irish technology firm Aptiv announced on 10 July that it had entered into an agreement to acquire US-based Winchester Interconnect from US private equity firm Snow Phipps Group. Aptiv will pay USD650m for the company, with the deal expected to close by the end of 2018. Winchester Interconnect provides connectors and cables for use in a range of commercial and military applications. The company has exposure to military programmes including the Lockheed Martin F-35 Lightning II Joint Strike Fighter, WIN-T communications system, Hellfire and TOW missiles, and ALQ-99 jammer. (Source: IHS Jane’s)
10 Jul 18. Australia looks to retain sovereign share in ASC Shipbuilding. The Australian government will retain a sovereign stake in state-owned ASC Shipbuilding during its programme with BAE Systems to build nine anti-submarine warfare frigates for the Royal Australian Navy (RAN). Jane’s understands that the partnership could also include BAE Systems investing funds into ASC Shipbuilding in the Sea 5000 programme that will create about 4,000 jobs in Australia, with local companies expected to provide around two-thirds of total content. In late June Canberra announced that BAE Systems’ 6,900-tonne Type 26 Global Combat Ship (GCS) had been selected for the AUD35bn (USD25.9bn) programme. Prime Minister Malcolm Turnbull said at the time that the vessels, which will be known as the Hunter class, will be constructed by ASC Shipbuilding, a subsidiary of ASC Pty Ltd, located at Osborne on the outskirts of Adelaide, South Australia. During the build programme, ASC Shipbuilding will become a subsidiary of BAE Systems, with the UK company to be fully responsible and accountable for the ships’ delivery. After construction is completed, Australia will resume full ownership of ASC. Jane’s also understands that during the Hunter-class build programme the Australian government will retain a “sovereign share” while BAE Systems will be expected to manage the programme, guaranteeing a return to the government of intellectual property, a skilled workforce, and the associated equipment at the end of the project. Under the Sea 5000 contract BAE Systems will also be contractually obligated to ensure that ASC Shipbuilding develops its ship design and construction capabilities by granting intellectual property rights, transferring key personnel, training the ASC workforce, and supporting the development of general know-how and expertise in ASC Shipbuilding. In addition, BAE Systems will be expected to make “appropriate financial investments” in ASC Shipbuilding as required to deliver the Sea 5000 programme and position the Australian company as a sovereign naval shipbuilding entity capable of independently undertaking the design and construction of naval warships into the future. (Source: IHS Jane’s)
09 Jul 18. Excelitas Technologies® Corp., a global technology leader focused on delivering innovative, customized photonic solutions, today announced that it has completed the acquisition of Research Electro Optics (REO) (Boulder CO, USA). REO is a privately-held company specializing in the volume manufacture of high-precision optical components, optical thin film coatings, and optical subassemblies as well as high-performance HeNe lasers for instrumentation and metrology applications across a wide range of market sectors. The combination of Excelitas and REO offers an expanded range of products and capabilities for OEM customers and Defense Prime Contractors seeking single-source convenience and reliability for high-performance illumination, optical and detection solutions.
“We are thrilled to welcome REO to the Excelitas family as their products complement Excelitas’ existing optics portfolio quite well”, noted Excelitas CEO, David Nislick. “REO provides an extremely capable, high quality optics operation in the United States that we look to grow with further investment as we have done with the former Qioptiq facilities in Europe and Asia.”
REO will continue full optical coatings and laser technologies operations from its state-of-the-art facilities in Boulder, CO as it is integrated with the Excelitas Technologies family.
Paul Kelly, President & CEO of REO, commented on the partnership with Excelitas. “This is a very exciting time for REO and its employees as the partnership with Excelitas will enable further investment in people, technology and capabilities. The opportunities available to REO as a result of the Excelitas global presence will contribute to accelerating growth. Finally, the culture embraced by Excelitas will allow REO employees to continue to thrive in their personal and professional lives.”
09 Jul 18. Arlington Capital Partners’ Portfolio Company Cadence Aerospace Announces the Acquisition of Perfekta, Inc. Cadence Aerospace (“Cadence” or the “Company”), a portfolio company of Arlington Capital Partners (“Arlington Capital”), today announced the acquisition of Perfekta, Inc. (“Perfekta”). Perfekta is a leading provider of large monolithic structures, precision-machined hard metal and aluminum components, complex machined forgings and structural assemblies to the aerospace, defense, and space end-markets. Perfekta has deep, longstanding relationships with blue chip OEMs and Tier 1 suppliers, and is headquartered in Wichita, KS with a 142,000 square foot facility. Perfekta will continue to be run by Julian Guerra II and the existing management team.
Thomas Hutton, CEO of Cadence, said “We are extremely excited to partner with Julian and his team to support Perfekta’s robust growth trajectory. The Perfekta team has done an exceptional job building a business with unique capabilities, operational excellence, and strong customer relationships, and we look forward to working with them as we collectively build on that success. The partnership with Cadence will allow us to further execute on our growth strategy, which is locked-in through long-term agreements,” said Julian Guerra II, President of Perfekta. “In addition to supporting our aggressive capital investment plans for 2018 and 2019, this partnership will allow us to serve our customers on a larger scale by leveraging Cadence’s six other manufacturing locations in the United States and Mexico.”
Peter Manos, a Managing Partner at Arlington Capital, said, “The acquisition of Perfekta continues to build upon our investment thesis for Cadence by further expanding our unique and vertically integrated capabilities in large and complex precision machined aerospace components. In addition, Perfekta’s strategic location in Wichita, a geography that is home to some of the aerospace industry’s most important players, will bring Cadence closer to its shared customer base.”
Bilal Noor, a Vice President at Arlington Capital said, “The acquisition creates significant synergies for both businesses through cross-selling opportunities, knowledge transfer, and access to a broader set of production capabilities and manufacturing footprint. Ultimately, this will allow the Company to better serve its customers and execute upon our growth plan.”
Houlihan Lokey served as financial advisor to Perfekta. SunTrust Robinson Humphrey advised Arlington Capital Partners and Cadence Aerospace on the transaction. (Source: BUSINESS WIRE)
09 Jul 18. Chinese bid for Northern Aerospace fails amid security fears. Chinese takeover attempts to buy a British defence company have fallen through, according to UK private equity firm Better Capital. Approval has not been given for aircraft parts maker Northern Aerospace to be purchased by Derby-based Gardner Aerospace, a subsidiary of Chinese aerospace and mining firm Shaanxi Ligeance Mineral Resources. Fears around Chinese government levels of access to sensitive information put the £44m deal back on hold last month, and Britain’s competition regulator has denied approval for the sale to go through. The UK Competition and Markets Authority (CMA), which now has until 13 July to submit a report on the competition and national security aspects of the proposed deal, launched a probe into the potential takeover in June. In an update this morning Better Capital said: “Permission to complete the sale was not obtained from the Competition and Markets Authority by the revised contractual deadline, despite requests for such permission by both parties.
“Accordingly the proposed transaction has lapsed.”
Northern Aerospace, which is based in Country Durham and employs around 600 people, was set to be sold until opposition last month from business secretary Greg Clark, who allegedly stalled the selling of Northern Aerospace on the urgent advice of defence secretary Gavin Williamson. Germany, the US and Canada are among a number of countries which have recently made high-profile takeover blocks as a result of security concerns around a string of acquisition attempts by Chinese companies across the world. Last year the UK government toughened its attitude towards foreign buyout deals as it looked to have greater say over military and technology deals in efforts to prevent homegrown companies in sensitive industries from falling into foreign hands. (Source: Google/cityam.com)
09 Jul 18. BMT acquisition strengthens submarine capability. BMT has purchased Australian submarine design company Effectiva, boosting it’s position as a world-leading maritime design and engineering consulting firm. BMT’s acquisition of Effectiva is a statement of confidence in the continued development of Australia’s sovereign shipbuilding industry and will significantly enhance the company’s local submarine expertise.
“The single greatest challenge in developing Australia’s national shipbuilding industry ambition is having the right people with the right skills and this is why we have brought Effectiva on board,” Peter Behrendt, managing director of BMT Design & Technology, said. “Effectiva simply represents the best Australia has to offer in terms of submarine expertise.”
The purchase of Effectiva is the latest move in BMT’s recent expansion of its Australia operations, which now sees the company with a significant presence in most major Australian shipbuilding cities.
“In particular, I would like to welcome Chelly Litster, Pat Donovan and Tim Fry – the main drivers of Effectiva – to the BMT stable,” Behrendt said.
Jeremy Berwick, managing director of defence and security at BMT, said, “BMT has a long-term commitment to Australia, one of the most exciting defence markets in the world, and this is an important strategic investment for the group. We look forward to continuing to grow our local workforce, which will benefit our partners, customers and employees.”
BMT is an international design, engineering and risk management consultancy, working principally in the defence, energy and environment, marine risk and insurance, maritime transport, and ports and logistics sectors. BMT invests significantly in research. Its customers are served through a network of international subsidiary companies in Australia, South Korea, the US and UK. (Source: Defence Connect)
05 Jul 18. Boeing-Embraer commercial joint venture includes KC-390 work. The Boeing-Embraer joint venture (JV) agreement announced on 5 July, while largely focusing on the two companies’ commercial businesses, also includes work for defence products. The two companies said they will create another JV to promote and develop new markets and applications for defence products and services, especially Embraer’s KC-390 tanker-transport aircraft, based on jointly identified opportunities.
“Joint investments in the global marketing of the KC-390, as well as a series of specific agreements in the fields of engineering, research, and development, and the supply chain, will enhance mutual benefits and further enhance the competitiveness of Boeing and Embraer,” Nelson Salgado, Embraer executive vice president for financial and investor relations, said in a statement. (Source: IHS Jane’s)
05 Jul 18. ST Engineering invests in Israeli cyber firm. Singapore Technologies Engineering (ST Engineering) has invested in Israeli cyber security firm Radiflow, as part of its continuing emphasis on building capability in advanced technologies. In a press release on 5 July, ST Engineering said the investment, the value of which was not disclosed, would enable its electronics business division to access Radiflow’s technologies. Specifically, ST Engineering said it intends to integrate Radiflow’s detection and prevention tools into the division’s command, control, and communications capabilities. These will be used primarily for countering cyber security risks faced by critical information infrastructure, said the group. Commenting on the investment, Ravinder Singh, the president of ST Engineering Electronics said, “With cyber security as one of our strategic growth areas, we have intensified our acquisition of niche and breakthrough cyber technologies that complement and strengthen our existing cyber security capabilities for key customers.” (Source: IHS Jane’s)
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Odyssey is an independent corporate finance firm which advises on acquisitions, business sales, management buy-outs and raising finance, typically in the £5m to £100m range. We have extensive experience in the niche manufacturing sector with our most recent completed deal being the sale of MacNeillie to Babcock Plc. Details can be seen at: http://www.odysseycf.com/case-study-macneillie/
As a result of this and related projects we have developed relationships with buyers and funders looking to acquire or invest in the sector. We would be happy to share further insights into the sector and to carry out reviews of businesses whose shareholders are considering an exit, acquisition or fundraise.
The review will include:
* Valuation
* Market review
* Comparative deals and structures
* Initial thoughts on buyers/ investors/ targets
* MBO viability
* Feasibility review and identification of any issues to be addressed pre-deal
There is no charge for this review.
If this is of interest we would be happy to meet at your convenience.
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