Sponsored by TCI International Inc.
26 May 22. Reunert acquiring Etion Create. Reunert has announced its acquisition of electronics equipment company Etion Create in order to expand its manufacturing and design capabilities and grow its international market presence.
In a notice to the Johannesburg Stock Exchange on 20 May, Reunert Limited announced it had entered into a share purchase agreement to acquire 100% of Etion subsidiary Etion Create for an initial R168m.
“It is currently envisaged that the Purchase Price, excluding the potential successful recovery of a receivable of approximately R2.6m and the Accrued Interest will amount to approximately R197m. The Purchase Price shall be subject to an absolute maximum of R210m,” Reunert stated.
The value of the net assets of Etion Create at 30 September 2021 was R159.4m and the profit attributable for the six month period then ended was R15.7m.
Etion Create will be integrated into the Applied Electronics segment of the Reunert group and will provide it with original design capability for the design integration and support of advanced technology in the mining and industrial; defence and aerospace; internet of things and sensors; and cyber security market segments.
After announcing Reunert’s interim results on Thursday, CEO Alan Dickson said in response to a defenceWeb question that Reunert already has an electronic manufacturing capability but this will be improved through the acquisition of Etion Create, which also has very good access to markets Reunert participates in, and has secured contracts in those markets.
He said the acquisition is “very synergistic” with Reunert’s defence assets as it enhances design and manufacturing and improves export market access. “We think it’s going to be a positive contribution to the segment if we can get it all the way to closing.”
The deal is subject to the fulfilment of outstanding conditions precedent by no later than 20 November 2022.
Etion Create (formely Parsec) offers things like signal processing platforms for radar, signal processing units for electronic warfare, weapons integration and weapon control systems, military standard communication interfaces, mission computers and display electronic units, secure communications, and test equipment. Etion Create previously developed camera sensor electronics for an optical helmet tracker solution for the Eurofighter and Gripen fighter jets used by European air forces as well as the South African Air Force. One of its other key products is the CheetahNAV tactical navigation system for light military vehicles.
Reunert “wishes to expand its Applied Electronics segment and believes that the augmentation of its existing assets with the strategic positioning, value proposition and original design manufacturing skills of Etion Create will accelerate these ambitions,” the company said.
Speaking about the defence market in general, Dickson said that Reunert was seeing some stress in local business, with larger capital projects only likely to be executed in the next financial year instead of this one. Reduced defence funding in South Africa negatively impacted the Reutech communications cluster and the radar business. Reutech supplies weapons turrets, communications systems, and radars to the South African National Defence Force – its equipment is being fitted to the new inshore patrol vessels and hydrographic survey vessel being delivered to the SA Navy.
Dickson said that export prospects across the group improved since June 2021, with increased demand coming in. “We are entering a period where export orders in the defence segment are going to be a in a positive direction,” he said in response to a defenceWeb query. Although there has not been a direct uptick in sales from the war in Ukraine as NATO and the USA are supplying equipment, the general worldwide environment is seeing improved defence spending over the next few years, he added. (Source: https://www.defenceweb.co.za/)
26 May 22. COHORT PLC (“Cohort” or “the Group”) Full Year Trading Update.
Cohort plc, the independent technology Group, today announces an unaudited trading update for its financial year ended 30 April 2022.
- Trading performance for the year ended 30 April 2022 is in line with our revised expectations at the time of the interim statement, other than on slightly weaker than expected revenue.
- Net funds at c.£11m (30 April 2021: net funds of £2.5m; 31 October 2021: net funds of £6.1m).
- Strong order intake of around £183m (2021: £180.3m).
- Record closing order book of c.£287m (30 April 2021: £242.4m).
- The closing order book underpins nearly £113m (69%) of the market revenue expectations for the year ended 30 April 2023 (2022: £100m, 64%).
FY22 year-end update
Cohort’s performance was in line with our revised expectations for the year, as set out in our interim statement in December 2021. Compared with 2021, the 2022 performance saw stronger performances from MCL, SEA, ELAC and MASS, offset by weaker performances from Chess and EID.
All of the Group businesses are returning to normal working after the pandemic but continue to experience some impact from global supply chain issues. The lifting of international travel restrictions has enabled access to customer premises for acceptance tests and contract negotiations. The Group has been able to resume close customer contact through industry events, with a significant presence at the DSEI exhibition in London in September 2021, and more recently attendance at events in the Far East and Australia.
Order intake remains strong. The Group benefited from the ELAC order for over €49m for the Italian Navy (announced July 2021), continued orders from the UK MOD for MCL’s hearing protection and communication ancillaries (announced April 2022), significant export orders for SEA’s Torpedo Launcher System (announced February 2022), and a strong first half contribution from MASS. EID continues to support the Portuguese Army, winning a significant order for its new Soldier System product (announced November 2021), although its overall order intake performance was weaker than our expectations.
As a result of the strong order intake the Group’s closing order book grew to c£287m (30 April 2021: £242.4m), of which certain orders extend out to the 2030s. This positive performance has given us enhanced visibility of future revenue across our businesses, particularly so at Chess, ELAC, MCL and SEA for the coming year. Overall, we entered the new financial year with nearly £113m (69%) of market revenue expectations for the year ended 30 April 2023 on order
In the longer-term, as a result of the conflict in Ukraine, we expect an increased focus on defence related spending from governments in the region.
Net funds continue to be strong and were better than expected at the year end.
Outlook for FY23
Following actions we took at Chess to improve performance, we are starting to see progress. We saw delays at MASS in the last financial year in delivering training to international customers but expect these to be resolved in the second half of the current financial year. Momentum in SEA’s naval division remains strong and several important opportunities at EID are expected in 2022/23.
The Group continues to see challenges to its supply chain from higher prices and longer lead times. We continue to monitor and manage this closely, and we have taken action where appropriate, including increasing our holding of certain stock items. Recruitment, particularly in some areas of engineering and IT, remains a challenge, though we have been able to increase our headcount through the year by 4% to deliver the larger order book over the coming years.
Overall, despite the residual challenges of the pandemic and the uncertain economic conditions, we expect to resume organic growth in 2022/23 and beyond and are not changing our expectations for the current financial year.
Notice of FY22 results
It is the Group’s current intention to issue its final results for the year ended 30 April 2022 in late July 2022.
Andrew Thomis, Chief Executive of Cohort, said: “Cohort’s performance was in line with our revised expectations for the year. Strong order intake, record closing order book and strong closing net funds provided a good start to the new financial year, and we expect to resume organic growth in 2022/23 and beyond.”
Investors Chronicle Comment: Cohort expects return to growth. Defence group Cohort (CHRT) said its full-year trading is in line with the revised expectations it set in December, when it flagged delays to order intake and a lower operating profit.
The company, which provides communication systems and other technologies to defence groups, said pandemic-related disruptions to its businesses were easing, with the lifting of travel restrictions allowing it to visit customers and attend trade events. However, supply chain bottlenecks meant higher prices and longer lead times, which led to to increasing stocks.
It has also been growing headcount in some areas, such as IT, to handle new orders. The company’s order book grew to £287mn by its 30 April year end, from £242mn a year earlier.
The shares rose by 4 per cent after chief executive Andrew Thomis said it expects “to resume organic growth in 2022/23 and beyond”. Over the longer term, it expects a renewed focus on defence spending from governments following Russia’s invasion of Ukraine.
Cohort’s shares have underperformed the broader defence sector, though. They trade at a price-to-earnings ratio of 14.6x for the current calendar year, which is a discount of about 16 per cent to the company’s rivals, broker Investec said. MF
25 May 22. TransDigm Group Incorporated (NYSE: TDG) announced today it has successfully completed its acquisition of DART Aerospace (“DART” or “the Company”), a portfolio company of Greenbriar Equity Group, L.P., for approximately $360m. TransDigm financed the acquisition with cash on hand. The acquisition of DART was previously announced on March 14, 2022. DART is headquartered in Montreal, Quebec. The Company is a leading provider of highly engineered, unique helicopter mission equipment solutions that predominantly service civilian aircraft. The Company is expected to generate approximately $100m in pro forma revenues for the calendar year ending December 31, 2022. Approximately 95% of DART’s revenues are derived from proprietary products and about 80% of DART’s revenues comes from the aftermarket. The products have a strong presence across major commercial rotary-wing platforms as well as select applications for defense and safety services. The Company employs approximately 400 people and operates from four primary facilities in Hawkesbury, Ontario; Portland, Oregon; Fort Collins, Colorado and Chihuahua, Mexico. (Source: PR Newswire)
26 May 22. Pennant Poised for a profitable recovery. An Aim-traded supplier of products and services that train and assist engineers in the defence and civilian sectors is winning new orders, has cut costs and moved back into profit.
- Order book up from £22mn to £32mn since start of 2022 with £13mn scheduled for recognition this year
- Post year-end disposal of surplus property for £2.1mn to slash borrowings
- Cash neutral position forecast at year-end
Pennant (PEN:36.75p), an Aim-traded supplier of products and services that train and assist engineers in the defence and civilian sectors, is now delivering a sustainable move into profit on the back of a growing order book.
In March 2022, the group was formally awarded a £8.8mn contract by Boeing to supply simulated training systems for the British Army’s new 50 Apache AH-64E helicopter fleet. Chief executive Phil Walker says that £1.8mn of the award will be delivered this year, a further £4.5mn in 2022 and £2.5mn in 2024. Walker also points out that Pennant is gaining real traction from the 2020 acquisition of Absolute Data Group (ADG), a Brisbane-based software company that assists clients to manage vast quantities of maintenance and training data (military aviation, commercial aerospace, and marine, rail, nuclear and automotive sectors).
ADG not only earns a high margin (90 per cent gross margin on software license sales, and 50 per cent on maintenance work), but is enabling Pennant to grow beyond its defence base and widen its geographic footprint, too. Recent awards include a $1.8mn (£1.44mn) contract with a new customer in the North American commercial aerospace market.
Since the start of the year, the software and services business has grown its annual revenue by 25 per cent to £7mn and Pennant is in “active dialogue with seven major operators across commercial, shipbuilding, space and rail industries.” Around 80 per cent of divisional revenue is recurring, including valuable government multi-year awards with both the Canadian and Australian defence departments to use Pennant’s Oracle-based OmegaPS software product (reduces the support cost of major capital equipment).
The momentum could be seen in the second half of last year when Pennant reported a small underlying operating profit of £0.2mn, so reversing a first half operating loss of £1mn which reflected the impact of a legacy contract with the MoD. That contract is expected to complete by September with no further financial impact anticipated. Furthermore, having taken £0.9mn costs out of the business, Pennant is now in leaner shape, hence why house broker WH Ireland expects last year’s adjusted pre-tax loss of £0.8mn to turn into a pre-tax profit of £0.6mn on six per cent higher revenue of £17mn.
The balance sheet is strengthening, too, as a surplus freehold warehouse and office property located in Cheltenham is being sold for £2.1mn, or 40 per cent above book value. Cash inflows from contract assets and property sale proceeds should move the group into a cash neutral position by the year-end, thus wiping out net debt of £3.5mn. Also, Walker expects to rationalise a further six freehold properties worth a combined £3.1mn, so there is potential for more disposals as the cost base is realigned to reflect higher
The disposal of the Cheltenham property alone will wipe a further £0.25mn of annual overheads, adding further weight to WH Ireland’s forecast that pre-tax profit will rise to £1mn on revenue of £18mn in 2023. Reassuringly, Pennant already has £12.9mn of orders booked for delivery in 2023. It’s worth noting, too, that £6.7mn of unused tax losses will benefit future taxable profits and accelerate the earnings recovery.
Pennant’s share price has risen five per cent since my last buy call (‘Pennant’s recovery on track’, 25 January 2022), highlighting strength relative to the FTSE Aim All-Share Total Return index which has lost 12 per cent of its value in the same four-month period. Expect the outperformance to continue. In fact, if contract momentum continues to build, as seems highly likely, then Pennant could even move into an earnings upgrade cycle, a possibility that is certainly not embedded in the group’s modest £13.5mn market capitalisation nor a 2023 price/earnings (PE) ratio of 14. Buy. (Source: Investors Chronicle)
25 May 22. Omni acquires AMW Professional Services. The local defence solutions company has moved to expand its presence in the maritime sector. Omni has announced its acquisition of AMW Professional Services, aimed at leveraging AMW’s ‘above the line’ contracting experience to bolster its offering to clients through the capability life cycle.
AMW is expected to be integrated into Omni’s existing services suite, with a view to enhancing the company’s presence in the maritime sector, building on existing services in aerospace, consulting, security and vetting.
“In a global environment that is becoming increasingly complex, individuals, businesses and governments face an ever-growing list of threats that generate traditional and non-traditional risks to people, assets, infrastructure, systems and interests,” the CEO of Omni, Jon Hawkins said.
“Omni protects individual, corporate and national interests from those threats.
“The acquisition of AMW will strengthen our offering to meet growing challenges and therefore the adapting requirements of our clients now, and into the future.”
Hawkins said the partnership would contribute to the growth of sovereign defence capability.
“AMW’s reputation has been built on providing highly qualified and professional people to deliver tailored services to our clientele,” Hawkins added.
“This is a natural cultural and capability fit with Omni’s trusted, proven team.
“As part of our commitment to growing sovereign capabilities in Australia, the AMW acquisition will position Omni to further support the government as defence spending increases over the next decade and our national security becomes more uncertain.”
AMW managing director Tony Wright said the company’s acquisition by Omni would build on almost a decade of growth.
“AMW has steadily grown with market demand and evolved into a highly regarded technology development and service delivery company,” Wright said.
“Like Omni, AMW’s through life capability life cycle, from initial concept to disposal, has consistently produced outstanding results in complex and large-scale projects and programs.”
AMW’s general manager Sonya Hogan added: “Our two companies are strongly aligned in culture and values, and I look forward to our people working together as they continue to support Australia’s national interests.”
(Source: Defence Connect)
24 May 22. Italy Annuls Sale of Military Drones Firm to Chinese Investors. Italy has annulled the sale of a military drones company to Chinese investors, three government officials told Reuters, the latest in a series of moves by Rome to curb Beijing’s forays into the euro zone’s third-largest economy.
The government opened an investigation last year into the 2018 sale to the Chinese players of a 75% stake in Alpi Aviation, based in northern Italy.
Rome decided to annul the deal after the probe concluded that those involved should have informed the government about the transaction under Italy’s so-called “golden power” regulations aimed at shielding strategically important assets.
The decision was ratified at a cabinet meeting on Thursday, the sources said. Prime Minister Mario Draghi’s office declined to comment.
The case showed how easy it is for changes in corporate ownership to slip under the radar at a time when pressure is rising in the United States and Europe to monitor potential risks to national security from Chinese investors.
The Chinese groups involved in the takeover are China Corporate United Investment Holding (CCUI) and CRRC Capital Holding, which are in turn controlled by the Management Committee of Wuxi Liyuan Economic Development Zone and SASAC.
A request for comment sent to these groups went unanswered outside of business hours. The Chinese embassy in Rome was not available to comment.
The operation was conducted through a chain of investment vehicles originating from a Hong-Kong based firm called Mars, which holds 75% of Alpi Aviation.
The case became public in September, when Italian tax police disclosed they were looking into a possible breach of rules regarding the sale of military materials, saying six people were under investigation.
Police at that time said the deal was “clearly” a predatory investment in technology.
Lawyers for Alpi Aviation have previously said the sale of the stake was transparent and in line with all regulations.
Italy’s use of its golden power usually results in deals being approved with recommendations intended to preserve national interest.
Since the regulation was introduced in 2012, government authorities have actually blocked foreign forays into Italy just six times. Five of these headed off Chinese bids, and four have come since Draghi’s took office 13 months ago. (Source: UAS VISION/Financial Post)
24 May 22. Kratos Acquires Southern Research Engineering Division Adding Unique Capabilities in Hypersonic, Ballistic Missile, Space and ISR Areas. Kratos Defense & Security Solutions, Inc. (Nasdaq: KTOS), a leading National Security Solutions provider, announced today that it has acquired the Birmingham, Alabama based Engineering Division of Southern Research for approximately $80m, subject to reduction based on working capital, including $75m in cash and $5m in shares of Kratos common stock. Southern Research’s Engineering Division (SRE) is the market leader in assisting customers in the development, modeling and deployment of advanced materials for extreme environments, including hypersonic, space, missile, missile defense, strategic deterrence, propulsion systems, and energy applications. SRE also specializes in Intelligence Surveillance and Reconnaissance (ISR) sensor development, electromechanical systems design and integration, aerospace engineering, materials engineering, artificial intelligence and machine learning, directed energy, RF systems design and integration, advanced manufacturing, and computational sciences.
Approximately 25 percent of the SRE purchase price was paid for the one-of-a-kind, unique 54-acre campus, with 102,000 square feet of laboratory, material assessment, technology, prototype development, secure, and other facilities, and the machinery and equipment needed to perform the core, sole source test and evaluation analysis and extreme environment characterization of materials for Hypersonic, Missile Defense, Strategic Deterrent, Space-related and other Systems. The balance of the purchase price represents approximately 1.6 times SRE’s historical, trailing twelve-month revenue, which includes approximately $15 m in annual ISR and other unique product development initiatives that are currently in development and expected to transition to production. The acquisition establishes Kratos SRE, a new business unit within Kratos’ Defense and Rocket Support Services Division.
The acquisition brings to Kratos a team of approximately 140 engineers, technicians and program support professionals, substantially all of which hold national security clearances. This dedicated group of professionals strengthens Kratos’ Hypersonic and Missile System-related capabilities by virtue of its market-leading advanced materials testing and evaluation capabilities and experience. The SRE group plays a unique and critical role in assisting the U.S. Government and defense industry contractors to characterize and select strategic materials for certain applications. SRE is also used widely by the space community for launch, re-entry and other vehicles, systems, and capabilities. “Kratos is the perfect home for my engineering team,” said Michael Johns, former Southern Research Vice President of Engineering and new Kratos SRE Senior Vice President. “From Hypersonics to ISR applications, Kratos brings tremendous synergies across all of our technical platforms. We have long been the leader in understanding materials in extreme environments for applications including Hypersonics, and as a result of this acquisition by Kratos, we can carry those programs all the way through flight testing and beyond, substantially increasing our total addressable market opportunity.”
Dave Carter, President of Kratos’ Defense & Rocket Support Services Division, said, “Kratos continues to lean forward to develop and acquire capabilities and solutions that expand our ability to support a diverse range of national security customers. We are very excited about the technical capabilities and synergies gained through this acquisition. Kratos SRE will continue to provide independent, unbiased laboratory and ground testing evaluation for unique and critical materials, and we will be working to expand Kratos SRE’s testing and technology maturation offerings to include affordable live fire tests using Kratos’ family of proven subscale launch vehicles. I am confident that our similar cultures and values will enable a smooth transition and lead to collaborative business opportunities with the Navy and other customers. Establishing Kratos SRE as our Advanced Concepts group demonstrates our commitment to Alabama and the growing aerospace and defense community in Birmingham.”
Eric DeMarco, Kratos’ President and CEO, said, “The acquisition of SRE enhances Kratos’ position related to the anticipated significant future funding increases for the recapitalization of Strategic Weapon Systems, including Hypersonic, Space, Strategic Deterrence, Propulsion and Missile Defense Systems. A priority of Kratos’ strategic thesis is being the market leader, and Mike and his team clearly satisfy that requirement. Once integrated with Kratos, based on recent program awards, funding under the Department of Defense’s recently approved 2022, and anticipated 2023, budget, and prospective customer acceptance of certain SRE products in development that are nearing completion, we expect an up and to the right future year-over-year organic growth trajectory for the business beginning in 2023.”
DC Advisory served as exclusive financial advisor and Maynard, Cooper & Gale, P.C. served as outside legal counsel to Southern Research in this transaction. (Source: ASD Network)
24 May 22. Brightstar Capital Partners Combines ERC and Oasis Systems to Advance Customer Mission Success in Aerospace, Defense and Cyberspace.
Brightstar Capital Partners, today announced that its portfolio company, ERC, LLC, and Oasis Systems, LLC (“Oasis”), have joined forces to scale and expand their agile software development, systems engineering and cybersecurity capabilities for mission critical defense and federal agencies.
The signing of the transaction’s definitive agreement was previously announced on April 13. By combining expertise in aviation, space, defense and cybersecurity with leading-edge innovations, the companies will bring together complementary capabilities and cultures to serve customers in more than 36 states across the U.S.
Tom Colatosti, Executive Chair of Oasis, will serve as Board Chair and CEO of the go forward company and Tim Nickerson, CEO of Oasis, will serve as Chief Operating Officer. The company will continue to operate out of headquarters’ locations in both Huntsville, Alabama, and Burlington, Massachusetts.
“We are thrilled to hit the ground running and help our customers solve their greatest challenges by utilizing our expanded capabilities and resources,” said Colatosti. “Our motto has been ‘Serving Those Who Serve Us’ and combining the cultures and mission focus of our two companies will enhance our ability to deliver advanced, full lifecycle solutions.”
“We will unite the strong performance records of ERC and Oasis and their history of delivering cutting-edge engineering, technology, and specialized services to support our customers’ missions,” said Nickerson. “We believe that our customers across national security and scientific industries will benefit from our expanded capabilities and achieve greater mission success.”
“The industry is evolving quickly, and we believe that this combination accelerates the company’s growth trajectory while continuing to deliver comprehensive solutions for new and existing customers,” said Michael Singer, Partner at Brightstar Capital Partners. “We are confident that Tom and the experienced leadership team will lead the combined company into a successful new era.”
“Our two companies are joining forces around one mission – customer success,” said Stacy Riley, Interim CEO of ERC. “With more than 5,000- employees and subcontractors across the country, we will be able to continue providing mission critical solutions for our customers and maintain our steadfast commitment to our nation and its future.”
ERC and Oasis share many important characteristics including an entrepreneurial engineering approach, core values, and a commitment to our nation and its future. Their common cultures are built on respect, empowerment, and collaboration.
Combined, ERC and Oasis will offer differentiated capabilities that deliver advanced, full lifecycle solutions in the areas of:
- Agile Software Development
- Emerging Technologies
- Information Technology
- Mission Support
- Modeling & Simulation
- Research & Development
- Systems Engineering
- Test & Evaluation
ERC was advised by legal counsel Kirkland & Ellis and financial advisor Houlihan Lokey. Rothschild & Co served as the exclusive financial advisor to Oasis, and Sullivan & Cromwell served as legal counsel.
Oasis Systems is a premier provider of customer-driven, cost-effective, and quality Engineering Services; Enterprise Systems and Applications; Human Factors Engineering; Information Technology and Cyber Security; Professional Services; and Specialized Engineering Solutions to the Department of Defense, Federal Aviation Administration, Nuclear Regulatory Commission, and other federal agencies. Oasis domain and technical experts provide leadership capabilities and competencies to help maintain customers’ technological superiority and dominance in space, in the air, on land, at sea and under the sea. For more information, go to www.oasissystems.com.
ERC is a leading provider of mission-critical engineering, technical and consulting services to the space and defense markets. For over 30 years, ERC has worked closely with such customers as the U.S. Department of Defense, NASA and other high-tech governmental entities on missions of national importance. ERC’s solutions combine precise engineering, innovative technologies, deep subject-matter expertise, firsthand mission understanding, and long-term customer knowledge to deliver the critical advantage needed to solve critical challenges. For more information, go to www.erc.us. Follow us on LinkedIn, Twitter and Facebook.
About Brightstar Capital Partners
Brightstar Capital Partners is a middle market private equity firm focused on investing closely held family, founder or entrepreneur-owned businesses where Brightstar believes it can drive significant value with respect to the management, operations and strategic direction of the business. Brightstar employs an operationally intensive “Us & Us” approach that leverages its extensive experience and relationship network to help companies reach their full potential. For more information, please visit www.brightstarcp.com. (Source: PR Newswire)
24 May 22. Parsons signs deal to acquire Xator for $400m. US-based technology company Parsons has signed a definitive agreement to acquire Xator Corporation in a deal valued at approximately $400m.
Based in Reston, Virginia, Xator provides mission-focused solutions to protect critical infrastructure and address national security requirements for the US Government around the world.
The company focuses on the development of Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) solutions.
This includes delivering integrated electronic and technical security systems, force protection systems, cybersecurity, biometrics, and counter-uncrewed aircraft systems (cUAS), among others.
Xator is expected to generate a revenue of approximately $300m for 2023.
The acquisition will bolster Parsons’ technical capabilities in critical infrastructure protection, cUAS, intelligence and cyber solutions, biometrics, and other segments.
The deal will also broaden Parsons’ customer base and enhance its presence within the US Special Operations Command, the Intelligence Community, Federal Civilian customers, and global critical infrastructure markets.
Parsons chair, president, and CEO Carey Smith said: “The addition of Xator is a natural extension of our growth strategy, adding important solutions and technologies that advance global security and protect critical infrastructure during a time of increasing and evolving threats.
“This acquisition strengthens our position across our two complementary markets and continues our strategy of buying accretive, mission-focused companies, aligned with global macroeconomic trends. I look forward to welcoming Xator’s talented team of more than 900 employees to the Parsons family as we collectively create the future.”
The transaction includes the net present value of a $57m transaction-related tax benefit, which revises the overall value to nearly $343m. (Source: army-technology.com)
23 May 22. Kaman Corporation Announces Definitive Agreement to Acquire the Parker-Hannifin Aircraft Wheel & Brake Division. Kaman Corporation (NYSE:KAMN) announced today that it has entered into a definitive agreement with Parker-Hannifin Corporation (“Parker”), under which Kaman will acquire Parker’s aircraft wheel & brake division (“Aircraft Wheel & Brake”) for $440 m, subject to a customary working capital adjustment and the receipt of all necessary regulatory approvals (the “Transaction”). Parker is divesting Aircraft Wheel & Brake in order to secure approval from certain governmental authorities in connection with Parker’s previously announced offer to acquire Meggitt PLC (the “Meggitt Acquisition”).
Aircraft Wheel & Brake has been a trusted provider of mission-critical wheel and brake technology products and solutions for more than eighty years. With a strong product portfolio supporting more than 100 platforms, Aircraft Wheel & Brake specializes in wheels, brakes and related hydraulic components for fixed-wing aircraft and rotorcraft. They have long-standing global relationships with leading military and general aviation customers providing customized proprietary designs, protected by intellectual property. Aircraft Wheel & Brake operates out of one centralized facility in Avon, Ohio, providing a full suite of capabilities including design, development and qualification, as well as manufacturing and assembly, product support and repairs.
“We are executing on our strategic priority of growing through accretive M&A, by expanding our Engineered Products segment by adding capabilities in markets that we know well,” said Ian Walsh, Chairman, President and Chief Executive Officer. “The complementary acquisition of Aircraft Wheel & Brake will advance this strategy by expanding the breadth of our product offerings, increasing our exposure to attractive markets, and driving meaningful near-term margin and cash flow accretion. We are excited to add the experienced Aircraft Wheel & Brake management team to our organization while utilizing their leading proprietary technology and strong customer relationships.”
Russ Bartlett, Senior Vice President, Chief Operating Officer and Engineered Products Segment Lead added, “Like Kaman, Aircraft Wheel & Brake prides itself on its best-in-class engineering and innovation and an engaged and loyal workforce that is dedicated to commercial excellence. We believe our similar cultures and customer-centric approaches make our organizations an outstanding match. We are excited for the Aircraft Wheel & Brake employees to join the Kaman team and work together to solve our customers’ toughest challenges.”
Strategic and Financial Benefits of the Transaction
Expands a Leading Engineered Products Provider: With a larger and even more extensive portfolio of engineered products, Kaman will broaden the number of offerings available to serve customers across a range of critical applications. Kaman’s expertise in running a solutions-based business combined with Aircraft Wheel & Brake’s proprietary manufacturing and material science technologies should enhance Kaman’s Engineered Products segment and add scale to its operations.
Provides Access to Attractive End Markets: The addition of Aircraft Wheel & Brake increases Kaman’s exposure to attractive aerospace and defense end markets with significant growth potential. Additionally, it provides the opportunity to increase Kaman’s position in higher margin aftermarket products.
Delivers Financial Benefits: The transaction is expected to be accretive to Kaman’s margin and cash flow within the first twelve months following the close of the transaction. The purchase price, values Aircraft Wheel & Brake at a multiple of 14x EBITDA for the twelve months ended December 31, 2021, including estimated tax benefits. Following the transaction, Kaman intends to apply the free cash flow from the combined business to quickly deleverage the balance sheet.
Approvals and Time to Close
The Transaction is expected to close before year end, subject to customary regulatory approval, including under applicable competition and foreign investment laws, and certain other closing conditions. Closing of the Transaction is not subject to a financing condition, although the Company has obtained a financing commitment, subject to customary conditions, that will provide it with sufficient funding to consummate the closing.
J.P. Morgan Securities LLC served as the financial advisor and K&L Gates LLP served as the legal advisor for Kaman.
BATTLESPACE Comment: This transaction will likely seal the deal for Parker Hannifin to procced with its takeover of Meggitt which is likely to finalise in September of this year.
23 May 22. Elbit Systems Ltd. (” Elbit Systems” or the “Company”) (NASDAQ: ESLT) (TASE: ESLT), the international high technology company, reported today its consolidated results for the quarter ended March 31, 2022.
In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive view of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 4 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.
Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: “Elbit Systems is well positioned to benefit from acceleration in defense budget growth, due to its portfolio of leading technological capabilities and positions in key global defense markets. Growth in the first quarter reflects strong demand for our solutions from customers around the world.
Elbit Systems’ employee retention plans include stock price linked compensation, enhancing our ability to realize the long-term growth potential. The stock price appreciation during the first quarter resulted in a sharp increase in compensation costs related to stock price linked compensation plans for employees.
We believe the growing demand for our solutions coupled with a capable and motivated workforce will be the primary drivers of future growth and the long term success of Elbit Systems.”
First quarter 2022 results:
Revenues in the first quarter of 2022 were $1,352.8m, as compared to $1,118.3m in the first quarter of 2021. A major part of the growth was organic, in addition to the contribution of Sparton, which was acquired in the second quarter of 2021.
Non-GAAP(*) gross profit amounted to $333.3m (24.6% of revenues) in the first quarter of 2022, as compared to $286.2m (25.6% of revenues) in the first quarter of 2021. GAAP gross profit in the first quarter of 2022 was $326.9m (24.2% of revenues), as compared to $281.3m (25.2% of revenues) in the first quarter of 2021. The GAAP and Non-GAAP gross profit in the first quarter of 2022 includes expenses of approximately $20m related to the effect of the significant increase in the Company’s share price on employees stock price linked compensation plans. (Source: PR Newswire)
23 May 22. Joint venture between high-tech Rheinmetall AG and DEMALOG, Germany’s biggest biometrics company. The technology enterprise Rheinmetall AG and DERMALOG Identification Systems GmbH, Germany’s largest biometrics firm, have contractually agreed to set up a joint venture. The new company, Rheinmetall Dermalog SensorTec GmbH, should begin operating in early summer 2022. Rheinmetall will hold a 65% stake in the partnership, with DERMALOG accounting for the remaining 35% share. Creation of the company still requires approval by the merger control authorities.
The strategic objective is to integrate biometric technology, artificial intelligence software, and digitization solutions in three different areas: driver monitoring, security, and industry. For Rheinmetall, the joint venture marks an important step in the transformation to digitization technology and expanding into driver monitoring solutions.
Furthermore, the new joint venture enhances the Düsseldorf-based technology group’s future-oriented diversification into biometrics applications geared to the security sector and industry. The move also adds to its existing digitization and software expertise. Importantly, the partnership reinforces Rheinmetall’s capabilities in five strategic technology clusters: automation, sensors, digitization, alternative mobility, and artificial intelligence.
“Setting up this joint venture is an important step in our transformation strategy, one which will enable us to offer cutting-edge monitoring, authentication, and security technology to our customers in the automotive sector and other industries”, states René Gansauge, CEO of Rheinmetall’s Sensors and Actuators division.
Rheinmetall Dermalog SensorTec GmbH will fuse Rheinmetall’s proprietary radar technology, which will be used for interior monitoring, with DERMALOG’s software, camera, and fingerprint technologies. In addition, an industrial application is already planned for the company access system at a Group-owned plant.
The majority-owned joint venture’s activities will be domiciled in Rheinmetall’s Sensors and Actuators division, which is spearheading the Group’s electrification strategy and applying new developments to the “Beyond Automotive” realm and industry in general.
DERMALOG Identification Systems GmbH
Headquartered in Hamburg, Rheinmetall’s new cooperation partner has been actively pioneering biometric products and solutions for 25 years. During this period, the company has evolved into Germany’s largest maker of biometric systems and devices and is an innovation leader in the world of biometrics. Best-in-class technologies characterized by high speed, precision and reliability are a hallmark of DERMALOG. In 2021 the company took the coveted German Innovation Award, just the latest is a serious of national and international prizes in various categories.
“The joint venture with Rheinmetall AG transfers biometrics into the field of automotive applications. Driver monitoring in particular will help to avoid accidents caused by distraction,” says Günther Mull, founder and managing director of DERMALOG Identification Systems GmbH in Hamburg about the joint venture with the technology group Rheinmetall.
Ever since the company’s foundation, it has been winning prestigious orders around the globe and carrying out major international projects. To date, the company has won 65 awards for its outstanding achievements in the field of biometrics, including the German Innovation Award Gold 2021 for its biometric cameras and the LivDet 2021 for its liveness recognition technology for differentiating between live and false fingers placed on a scanner for identification. Furthermore, following long years of successful cooperation, the company has succeeded in gaining a strong, experienced partner in Germany’s Bundesdruckerei, or Federal Printing Office, with a participation of 22.43%.
The company’s portfolio includes automated biometric identification systems and automated fingerprint identification systems; the latest fingerprint scanners; biometric border control systems; IDs and passports; and voting systems. Its customer base is extensive, encompassing law enforcement authorities, government residency registration offices and election authorities, vehicle registration offices, health and security companies, access control and data security firms, authorization and authentication services, mobile security organizations, government agencies, as well as public and private companies and banks around the globe. Among other things, DERMALOG offers solutions such as “FingerLogin”, “FingerPayment” and “FingerBanking”. The company is active in over 100 countries, serving clients not only in Germany and Europe, but also in Asia, Africa, Latin America and the Middle East. For more information on the company, please go to: www.dermalog.com.
TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.