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KippsDeSanto & Co. advises Physical Optics Corporation on its Sale to Mercury Systems, Inc. (NASDAQ: MRCY)

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KippsDeSanto & Co. advises Physical Optics Corporation on its Sale to Mercury Systems, Inc. (NASDAQ: MRCY)

KippsDeSanto & Co. is pleased to announce the sale of its client, Physical Optics Corporation (“POC” or the “Company”) to Mercury Systems, Inc. (“Mercury”).
Headquartered in Torrance, CA, POC serves as a leading designer, developer, and integrator of advanced technologies primarily focused on mission-critical avionics and subsystems for the most demanding defense applications, supporting airborne solutions broadly transferable to ground, maritime, and unmanned platforms. The Company’s principal expertise in optimizing size, weight, and power (“SWaP”) and enhancing encryption capabilities for the most complex and demanding avionics solutions has produced a robust portfolio of innovative products – much of which was developed leveraging the Small Business Innovation Research (“SBIR”) program – including data transfer systems, flight data recorders, mission computers, high-definition data and video recorders, and advanced encryption devices for well-funded and highly-visible programs of record. The common-use nature of POC’s technologies directly translates into broad adoption across the Navy, Army, and Air Force for newly fielded platforms (including burgeoning positions on future vertical lift, the B-2, and various unmanned platforms), as well as established relationships upgrading legacy aircraft (including the F-18, V-22, the H-60 family, T-45, F-16, F-15, and F-22).

Employing approximately 350 employees, including over 160 multi-disciplinary engineers and a deep bench of PhDs, POC has developed a substantial portfolio of intellectual property (“IP”), including over 160 patents as well as numerous SBIR-oriented technologies covering 60 diverse focus areas spanning avionics, electronic warfare, artificial intelligence, and machine learning. POC’s unique combination of avionics solutions, core IP and engineering expertise, embedded status on well-funded airborne programs, and state-of-the-art facilities uniquely position the Company to complement Mercury’s existing capabilities and accelerate the combined company’s growth via the delivery of pre-integrated avionics subsystems to an increasingly broad customer set.

We believe this transaction demonstrates several key trends in the aerospace and defense mergers and acquisitions (“M&A”) market:

  • Defense program modernization continues to be an area of significant interest for buyers given the evolving budgetary environment
  • Demand for companies with entrenched positioning on well-funded Programs of Record (“PoRs”) and trusted customer relationships remains strong
  • Ongoing M&A focus by strategic buyers on acquisition targets with advanced engineering capabilities, proprietary IP, SBIR-oriented technologies, and robust Research & Development capabilities
  • Public strategic buyers continue to aggressively deploy capital in order to accelerate organic growth strategies and gain access to PoRs and customers

 About KippsDeSanto & Co.

KippsDeSanto & Co. is an investment banking firm focused on serving growth-oriented Aerospace / Defense, Government Services and Technology companies. We are focused on delivering exceptional M&A and Financing transaction results to our clients via leveraging our scale, creativity and industry experience. We help market leaders realize their full strategic value. Having advised on over 100 industry transactions, KippsDeSanto is recognized for our analytical rigor, market insight, and broad industry relationships. There’s no substitute for experience.  For more information, visit www.kippsdesanto.com.

Investment Banking products and services are offered through KippsDeSanto & Co., a non-bank subsidiary of Capital One, N.A., a wholly-owned subsidiary of Capital One Financial Corporation, and a member of FINRA and SIPC. Products and services are Not FDIC insured, Not Bank Guaranteed, May Lose Value, Not a Deposit, and Not Insured by Any Federal Government Agency.

Press Release

Mercury Systems to Acquire Physical Optics Corporation

  • Continues to scale Mercury’s global avionics & mission systems business
  • Complementary capabilities enhance position at forefront of military digital convergence
  • Expands platform and mission management content on new and existing airborne platforms
  • Broadens mission processing capabilities, adding data transfer and recording solutions
  • Leverages investments in embedded security and safety-certifiable avionics processing

ANDOVER, Mass., Dec. 07, 2020 (GLOBE NEWSWIRE) – Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), a leader in trusted, secure mission-critical technologies for aerospace and defense, today announced that it has signed a definitive agreement to acquire Physical Optics Corporation (“POC”). Based in Torrance, Calif., POC is a leading designer, developer, and integrator of advanced technologies primarily focused on avionics & mission subsystems for defense applications.

Pursuant to the terms of the agreement, Mercury will acquire POC for an all-cash purchase price of $310 million, subject to net working capital and net debt adjustments. The acquisition and associated transaction expenses are expected to be funded through a combination of cash on hand and Mercury’s existing revolving credit facility.

POC is currently expected to generate revenue of over $120 million for its fiscal year ending December 31, 2020. The acquisition represents a multiple of approximately 13x next twelve months EBITDA and is expected to be immediately accretive to adjusted EPS.

“The acquisition of Physical Optics Corporation adds important capabilities on new and existing airborne programs in the platform and mission management market,” said Mark Aslett, Mercury’s president and chief executive officer. “The combination of Mercury’s safety-certifiable and secure avionics processing solutions with POC’s deep portfolio of data storage, transfer, and encryption technologies will enable us to deliver more complete, pre-integrated avionics subsystems to our customers. POC has a similar growth profile to Mercury, supported by several key design wins that are transitioning into production. We are very excited for POC to join the Mercury team.”

“This acquisition broadens our avionics product and technology portfolio to help our defense Prime customers, the U.S. Navy, Army and Air Force deploy next-generation open-architecture mission computing solutions,” added Amela Wilson, senior vice president, Mercury Mission. “Similar to Mercury, POC is well-positioned in faster-growing segments of the defense market and benefits from secular growth drivers, such as supply chain delayering. Together, Mercury and POC can provide customers new capabilities and subsystem solutions.”

Founded in 1985, POC employs approximately 350 people, including more than 160 highly skilled engineers, and holds over 160 patents worldwide, covering 60 technologies. They support mission-critical programs with common-use products spanning data transfer systems, flight data recorders, mission computers, high-definition data and video recorders, and advanced encryption devices. POC is well-positioned on a wide variety of key airborne and naval defense platforms that are experiencing increased funding for electronics modernization to specifically address digital convergence and combat near-peer threats in line with the National Defense Strategy.

The acquisition is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is currently expected to close during Mercury’s fiscal 2021 second quarter ending January 1, 2021.

Operating at the intersection of high-tech and defense, Mercury Systems is the leader in making trusted, secure mission-critical technologies profoundly more accessible. Our work is inspired by our Purpose of delivering Innovation That Matters by and for People Who Matter, to make the world a safer, more secure place for all. For more information, visit mrcy.com or contact Mercury at (866) 627-6951 or info@mrcy.com.

Mercury Systems – Innovation That Matters®

Mercury Systems is a leading technology company serving the aerospace and defense industry, positioned at the intersection of high-tech and defense. Headquartered in Andover, Mass., the Company delivers solutions that power a broad range of aerospace and defense programs, optimized for mission success in some of the most challenging and demanding environments. The Company envisions, creates and delivers innovative technology solutions purpose-built to meet customers’ most-pressing high-tech needs, including those specific to the defense community. To learn more, visit mrcy.com, or follow us on Twitter.

Forward-Looking Safe Harbor Statement

This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the acquisitions described herein and to fiscal 2021 business performance and beyond and the Company’s plans for growth and improvement in profitability and cash flow. You can identify these statements by the use of the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company’s markets, effects of epidemics and pandemics such as COVID, effects of any U.S. federal government shutdown or extended continuing resolution, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. Government’s interpretation of, federal export control or procurement rules and regulations, market acceptance of the Company’s products, shortages in components, production delays or unanticipated expenses due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions and restructurings, or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, increases in interest rates, changes to industrial security and cyber-security regulations and requirements, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 3, 2020. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

Mercury Systems and Innovation That Matters are registered trademarks of Mercury Systems, Inc. Other product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.

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KippsDeSanto & Co. advises Tapestry Technologies, Inc. on its sale to ManTech International Corporation

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KippsDeSanto & Co. advises Tapestry Technologies, Inc. on its sale to ManTech International Corporation

KippsDeSanto & Co. is pleased to announce the sale of its client, Tapestry Technologies, Inc. (“Tapestry” or the “Company”) to ManTech International Corporation (“ManTech”) (Nasdaq: MANT).

Headquartered in Chambersburg, PA, Tapestry is a leading provider of comprehensive cybersecurity solutions to the U.S. Defense Information Systems Agency (“DISA”) and Department of Defense (“DoD”). Tapestry offers a wide array of highly innovative solutions spanning cybersecurity architecture, policy and compliance, network and systems engineering, workload automation, training, and cloud architecture services. With a 15+ year history supporting the DoD and DISA, Tapestry has developed a highly regarded reputation and an entrenched position within the agency as a trusted and reliable partner with deep domain expertise. The Company’s focus on innovation has led to the development of proprietary methodologies and tools which enable Tapestry to deliver highly profitable, yet cost-effective, workload automation solutions.

The transaction enhances and extends ManTech’s cyber defense capabilities within the DoD, adding customers and new past performance qualifications, as well as long-term contracts.

We believe this investment demonstrates several key trends in the current cybersecurity environment:

  • Cybersecurity capabilities continue to be a highly coveted growth and M&A area given the importance to IT Modernization efforts and increased budgetary focus
  • Significant demand for profitable, technology-centric, engineering solutions supported by proprietary tools and processes
  • Strong focus on companies that have embedded positions within sought-after federal customers, and strong competitive differentiators

 About KippsDeSanto & Co.

KippsDeSanto & Co. is an investment banking firm focused on serving growth-oriented Aerospace / Defense, Government Services and Technology companies. We are focused on delivering exceptional M&A and Financing transaction results to our clients via leveraging our scale, creativity and industry experience.  We help market leaders realize their full strategic value.  Having advised on over 100 industry transactions, KippsDeSanto is recognized for our analytical rigor, market insight, and broad industry relationships.  There’s no substitute for experience.  For more information, visit www.kippsdesanto.com.

Investment Banking products and services are offered through KippsDeSanto & Co., a non-bank subsidiary of Capital One, N.A., a wholly-owned subsidiary of Capital One Financial Corporation, and a member of FINRA and SIPC. Products and services are Not FDIC insured, Not Bank Guaranteed, May Lose Value, Not a Deposit, and Not Insured by Any Federal Government Agency. 

Press Release 

ManTech Acquires Tapestry Technologies to Expand Defensive Cyber Capabilities

HERNDON, Va., Dec. 14, 2020 (GLOBE NEWSWIRE) — ManTech International Corporation (Nasdaq: MANT) has completed the acquisition of Tapestry Technologies, a leading provider of advanced cyber solutions. Headquartered in Chambersburg, Pennsylvania, and founded in 2005, Tapestry Technologies offers a full range of cyber defense solutions and expertise, including cyber architecture and policy development, DevSecOps-based systems and software engineering and cyber training.

This acquisition enhances and extends ManTech’s cyber defense capabilities within the Department of Defense, adding customers, new past performance qualifications as well as mission-critical contracts. Furthermore, Tapestry Technologies’ approximately 150 highly skilled and cleared professionals expand ManTech’s deep cybersecurity talent base.

“ManTech has a well-established reputation as a leader of full-spectrum cyber capabilities,” said Kevin M. Phillips, ManTech Chairman, CEO and President. “We are pleased to add Tapestry Technologies’ talented people and strong customer relationships to the ManTech family. The addition is highly complementary and further builds upon our differentiated cyber solutions, allowing us to deliver more to our customers while positioning us for continued growth.”

About ManTech

ManTech International Corporation (Nasdaq: MANT) provides mission-focused technology solutions and services for U.S. defense, intelligence and federal civilian agencies. In business more than 50 years, we excel in full-spectrum cyber operations, data collection & analytics, enterprise IT, agile DevOps systems engineering and software application development solutions that support national and homeland security. Additional information about ManTech can be found at mantech.com.

Forward-Looking Information

Statements and assumptions made in this press release, which do not address historical facts, constitute “forward-looking” statements that ManTech believes to be within the definition in the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties, many of which are outside of our control. Words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” or “estimate,” or the negative of these terms or words of similar import, are intended to identify forward-looking statements.

 These forward-looking statements are inherently subject to risks and uncertainties, and actual results and outcomes may differ materially from the results and outcomes we anticipate. Factors that could cause actual results to differ materially from the results we anticipate include, but are not limited to, the following: failure to maintain our relationship with the U.S. government, or compete effectively for contract awards; inability to recruit and retain sufficient number of employees with specialized skill sets or necessary security clearances who are in great demand and limited supply; adverse changes in U.S. government spending for programs we support, whether due to changing mission priorities, socio-economic policies, cost reduction initiatives by our customers, or other federal budget constraints generally; disruption of our business or damage to our reputation resulting from security breaches in customer systems, internal systems (including as a result of cyber or other security threats), or employee misconduct; failure to realize the full amount of our backlog or adverse changes in the timing of receipt of revenues under contracts included in backlog; issues relating to competing effectively for awards procured through the competitive bidding process; failure to obtain option awards, task orders or funding under contracts; renegotiation, modification or termination of our contracts, or failure to perform in conformity with contract terms or our expectations; failure to successfully integrate acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions; non-compliance with, or adverse changes in, complex U.S. government laws, procurement regulations or processes; and adverse results of U.S. government audits or other investigations of our government contracts. These and other risk factors are more fully discussed in the section entitled “Risk Factors” in ManTech’s Annual Report on Form 10-K previously filed with the Securities and Exchange Commission on Feb. 21, 2020, Item 1A of Part II of our Quarterly Reports on Form 10-Q, and, from time to time, in ManTech’s other filings with the Securities and Exchange Commission.

 The forward-looking statements included herein are only made as of the date of this press release, and ManTech undertakes no obligation to publicly update any of the forward-looking statements made herein, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.

Products or services are Not FDIC Insured, Not Bank Guaranteed, May Lose Value, Not a Deposit, and Not Insured By Any Federal Governmental Agency.

Media Contact

Jim Crawford

Executive Director, External Communications

(M) 571.446.7550

James.Crawford2@ManTech.com

 

Investor Relations Contact

Stephen Vather

VP, M&A and Investor Relations

(O) 703.218.6093
Stephen.Vather@ManTech.com

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KippsDeSanto’s DealView – Top 10 M&A Deals of the Quarter

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KippsDeSanto & Co., an investment banking firm focused on serving growth-oriented Aerospace / Defense, Government Services and Technology companies, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended December 31st, 2020.

The following is our take on the most notable announced M&A transactions in the fourth quarter of 2020 — not only based on size, but also on strategic importance and / or impact.

Of the above transactions, the following were especially noteworthy:

The aerospace and defense deal of the quarter is Lockheed Martin Corporation’s (“Lockheed Martin”) pending acquisition of Aerojet Rocketdyne Holdings, Inc. (“Aerojet Rocketdyne”). Headquartered in El Segundo, CA with an expansive geographic footprint across the U.S., Aerojet Rocketdyne is a cutting-edge technology company at the forefront of defending America and expanding human and robotic presence across the solar system that provides propulsion and energetics to space, missile defense, strategic, tactical missile, and armaments customers across the globe. The $4.4 billion acquisition translates to a 33% premium of Aerojet Rocketdyne’s share price and represents the next phase of the California-based company’s evolution. Aerojet Rocketdyne contributes nearly 5,000 employees and more than $2 billion in annual revenue to Lockheed Martin. The transaction is expected to enhance Lockheed’s mission support for both U.S. and allied customers, and would make it the leading provider of hypersonic missile systems. The vertically integrated, scalable platform is expected to build on the robust, mission-focused partnership that the two companies have forged, and will combine complementary capabilities, a streamlined supply chain, and substantial human capital to deliver next generation, tip-of-the-spear warfare solutions. The deal highlights the slew of league leaders—such as Parsons in its acquisition of Braxton Science and Technology Group and Raytheon in its acquisition of Blue Canyon Technologies—that have sought to enhance the depth and breadth of their space offerings.

The technology solutions deal of the quarter is Veritas Capital’s (“Veritas”) pending acquisition of the Federal IT and Mission Support Services business unit of Northrop Grumman, which is expected to close in the first half of 2021. The business, which generated approximately $2.3 billion in revenue in 2020, provides a wide range of advanced technology solutions, including cybersecurity, data analytics, cloud, mission-critical application development, and advanced engineering to various Federal defense, intelligence, space, civil, and health agencies. Once finalized, the business is expected to be combined with Peraton, a portfolio company of Veritas, and will create a leading government mission capability integrator and IT provider focused on delivering high-end technology-enabled services. The acquisition is another example of Veritas acquiring corporate divested assets, following its purchases of various Hewlett Packard Enterprise, PricewaterhouseCoopers LLP, and Harris Corporation assets. The Northrop assets will give Peraton additional scale, new capabilities, and expanded customer relationships, particularly across Federal civil and health marketplaces. The deal also highlights continued interest in acquiring established businesses with advanced cyber and cloud capabilities.

About KippsDeSanto & Co KippsDeSanto & Co. is the largest independent investment banking firm exclusively focused on serving leading, growth-oriented Aerospace/Defense, Government Services and Technology companies.  We are focused on delivering exceptional M&A and Financing transaction results to our clients via leveraging our scale, creativity and industry experience.  We help market leaders realize their full strategic value.  Having advised on over 100 industry transactions, KippsDeSanto is recognized for our analytical rigor, market insight and broad industry relationships.  There’s no substitute for experience.  For more information, visit www.kippsdesanto.com.

Securities and investment banking products and services are offered through KippsDeSanto & Co., a nonbanking subsidiary of Capital One, N.A., a wholly owned subsidiary of Capital One Financial Corporation. KippsDeSanto is a member of FINRA and SIPC. Products or services are Not FDIC Insured, Not Bank Guaranteed, May Lose Value, Not a Deposit, and Not Insured By Any Federal Governmental Agency.