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, is pleased to share its DealView – the “Top 10 M&A Deals of the Quarter” – for the quarter ended March 31st, 2021.

Of the above transactions, the following were especially noteworthy:

The aerospace and defense deal of the quarter is the pending acquisition of Cubic Corporation (NYSE: CUB) (“Cubic”) by Veritas Capital and Evergreen Coast Capital (an affiliate of activist investor Elliott Management). Headquartered in San Diego, CA, Cubic is a technology-driven, market-leading provider of integrated solutions that increase situational understanding for transportation, defense C4ISR, and training customers worldwide to decrease urban congestion and improve military effectiveness and operational readiness. Cubic has two divisions: Cubic Mission and Performance Solutions (“CMPS”) and Cubic Transportation Systems (“CTS”). Following a weeks long bidding war, Cubic announced on March 31st that it accepted Veritas and Evergreen’s proposal to buy the company at $75 per share. The contention surrounding the acquisition began on February 8th, when Cubic announced an agreement to be acquired by New York-based private equity firm Veritas Capital and California-based private equity firm Evergreen Coast Capital for $70 per share, or approximately $3.3B. The transaction, which was expected to close in 2Q21, was halted by the March 22nd announcement of Singapore Technologies Engineering’s (“ST Engineering”) (SGX: S63) bid to acquire Cubic for $76 per share, or approximately $3.6B. ST Engineering had planned to sell the CMPS business to an affiliate of Blackstone Tactical Opportunities and intended to invest in CTS and retain the “Cubic” brand. However, on March 29th, subsequent to their original response, Veritas and Evergreen submitted a revised offer of $72 per share, which ST Engineering countered the same day with an offer of $78 per share. Thereafter, Veritas and Evergreen raised their bid to $75 per share, leading to Cubic’s announcement that it would accept the proposal “based on the superior certainty and anticipated timing of closing the existing transaction with” Veritas and Evergreen.

The technology solutions deal of the quarter is the pending acquisition of Perspecta Inc. (NYSE:PRSP) (“Perspecta”) by Peraton Corporation (“Peraton”), a portfolio company of Veritas Capital (“Veritas”). Based in Herndon, VA, Perspecta provides enterprise information technology (“IT”) services to government customers in Federal, state, and local markets. The acquisition bolsters Peraton’s current solutions set as a provider of highly-differentiated space, intelligence, cyber, defense, homeland security, and communications. Once combined, the two organizations will create a leading technology provider delivering end-to-end capabilities in IT and mission support for a diverse array of U.S. government customers. As part of the $7.1 billion purchase price, Perspecta shareholders will receive $29.35 per share in cash, representing a premium of 49.7% to the Company’s unaffected closing stock price of $19.60 on November 6, 2020, the last trading day prior to media reports of a strategic review process. Veritas owned two of the three businesses that were combined to create the publicly-traded Perspecta in 2018 and at the time of the announcement owned approximately 14.5% of total shares outstanding. This acquisition not only demonstrates Veritas’ continued focus on the government technology market, but also highlights the continuation of sector consolidation. Despite the ongoing COVID-19 pandemic and associated economic challenges, M&A deal volume across the government services marketplace remains at record levels, with more than 110 and 45 deals announced in 2020 and year-to-date 2021, respectively.

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.

Securities and investment banking products and services are offered through KippsDeSanto & Co., a non-banking 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.

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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.

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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 September 30th, 2020.

The following is our take on the most notable announced M&A transactions in the third 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 the United Kingdom (“UK”) Government’s and Bharti Global’s pending acquisition of OneWeb, LLC. OneWeb, a satellite technology company with dual headquarters in London and the Washington D.C. metro area, provides space-based internet from low Earth orbit (“LEO”). After reducing its headcount nearly 90%, the company filed for bankruptcy in March due to a liquidity crisis exacerbated by the COVID-19 pandemic and the resulting market selloff. The anticipated cash infusion of more than $1 billion is expected to allow OneWeb to successfully emerge from Chapter 11 proceedings and continue its mission of becoming a global leader in low latency connectivity. Previously, OneWeb didn’t have the ability to compete with Starlink’s budget, but with funding from the UK and Bharti, OneWeb becomes a legitimate challenger to Starlink’s dominant presence in the LEO internet market. For Bharti Global, which already has its own mobile broadband networks, the OneWeb investment is expected to return value as Bharti can use its networks as a testing ground for OneWeb products and services. Bharti will also be able to deliver OneWeb’s offerings to established markets in South Asia and Sub-Saharan Africa, where the geography necessitates the use of satellite-based connectivity. The UK benefitted from this acquisition in a different manner. The acquisition allowed the UK to establish its first sovereign space capability. In turn, the UK can potentially leverage this capability for positioning, navigation, and timing (“PNT”) as Brexit has created barriers to the EU’s satellite resources.

The technology solutions deal of the quarter is Amentum’s pending acquisition of DynCorp International, which is expected to close in the fourth quarter of 2020, subject to customary closing conditions and regulatory approvals. DynCorp is a leading global provider of aviation, logistics, training, intelligence, and operational solutions to military, government, and commercial customers. Once finalized, the combined business will become one of the largest providers of mission-critical aviation, logistics, and IT support services, with more than $6 billion of revenue and 34,000 employees operating across approximately 30 countries. The acquisition is expected to accelerate growth across the combined platform by creating cross-selling opportunities, as DynCorp enhances Amentum’s services offerings and provides expanded customer access. The combination of Amentum’s core offerings within mission support, IT, cybersecurity, nuclear and environmental remediation, program management, and testing is complementary to DynCorp’s expertise across aviation, contractor logistics, intelligence, and training. The expanded set of capabilities allows the combined platform to offer a more complete set of solutions to its customers and hopefully augment growth. At an industry level, the deal, in tandem with such other acquisitions as KBR’s purchase of Centauri, SAIC’s purchase of Unisys Federal, and Leidos’ purchase of Dynetics, underscores an ongoing appetite to add scale via mergers and acquisitions among the industry’s largest players.

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.

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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 March 31, 2020.(1)

Current market conditions and the ongoing COVID-19 global pandemic have already begun to impact M&A activity in our target sectors. While M&A activity was particularly strong during the beginning of 2020, transaction volume in March was noticeably lower. March deal announcements across all three sectors included 20 transactions, compared to an average of 38 transaction announcements per month in the first two months of 2020.

The following is our take on the most notable announced M&A transactions in the first 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 Woodward, Inc.’s (NasdaqGS: WWD) and Hexcel Corporation’s (NYSE: HXL) pending merger of equals, with Woodward to remain as the surviving entity. The newly formed Woodward Hexcel is a premier global provider of innovative and integrated aerodynamic, propulsion, and composite technology systems to the aerospace, defense, and industrial markets, and is expected to generate $5.3 billion in sales and $1.1 billion in EBITDA on a 2019 pro-forma basis. Woodward Hexcel is expected to benefit from enhanced scale, combined R&D capabilities, a strategically diversified portfolio of products and customers, as well as a stronger financial profile. The estimated $7.5 billion transaction was announced on January 12th following approval by both Board of Directors, and is expected to close in the third quarter of 2020. The all-stock consideration will be paid at a fixed exchange ratio of 0.625 shares of WWD for each HXL share with Woodward shareholders owning 55% of the combined entity. The acquisition highlights industry consolidatation with the resulting effect yielding Hexcel Woodward improved operating leverage, diversified end market exposure, as well as embedded content and complementary technologies on premier aerospace platforms, to accelerate growth and generate significant value for both sets of shareholders.

The government technology solutions deal of the quarter is SAIC’s (NYSE: SAIC) acquisition of Unisys Federal, an operating unit of Unisys (NYSE: UIS). The all-cash transaction is valued at $1.2 billion ($1.025 billion net of $175 million of tax assets) and is expected to close by May 1, 2020, following customary closing requirements. Unisys Federal is a leading provider of cloud migration, infrastructure modernization, managed services, and enterprise IT-as-a-service (“EITaaS”) to U.S. federal civilian agencies and the Department of Defense. Given its core strengths, the transaction is expected to further differentiate SAIC within the government services market by adding technology-enabled, intellectual property-based solutions and digital transformation services, that are typically sold via commercial-like service delivery models. Unisys Federal holds several sizable and highly-sought after contracts focused on these areas, which are complementary to SAIC’s growing portfolio of NextGen IT awards. In addition, the acquisition provides SAIC with enhanced customer access and offers new avenues for growth as well as cross-selling opportunities. The transaction will help free up resources Unisys can use to cancel debt and pension shortfalls and improve growth prospects for 2020. This acquisition also demonstrates a continued interest by large public companies in the Government Technology Solutions marketplace to add scale, vehicles, and NextGen IT capabilities via acquisitions.

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.

Securities and investment banking products and services are offered through KippsDeSanto & Co., a non-banking 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.

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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 31, 2019.  The following table is our take on the most notable announced M&A transactions — 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 Spirit Aerosystems Holdings Inc.’s pending acquisition of select assets of Bombardier Aerostructures and its Aftermarket Services Businesses in Morocco, Texas and Northern Ireland. The acquired assets, which produce parts for the Airbus SE A320 and A220 jets, employ more than 4,000 people at three sites, and will help cushion Spirit from the disruption caused by the grounding and slowed production of the 737 MAX; the 737 MAX accounts for an estimated 50% of Spirit’s annual sales. The purchase of these assets is part of Spirit’s strategy to secure additional business at Airbus, expand military and helicopter aircraft work, and strengthen its non-U.S. operations. The wing-making facility in Northern Ireland will provide Spirit with access to the Airbus A220 program, as well as the potential for additional next generation work for single-aisle jets. The estimated $1.09 billion transaction was announced on October 31st; the cash consideration will be $500 milllion; Spirit AeroSystems will assume approximately $300 million in net pension liabilities and approximately $290 million of government grant repayment options.

The government technology solutions deal of the quarter is Leidos’ (NYSE: LDOS) $1.65B acquisition of the employee-owned and privately-held national security solutions provider, Dynetics, Inc (“Dynetics”). Dynetics will operate as a wholly-owned subsidiary of Leidos. The acquisition is expected to add $110M of EBITDA to Leidos in 2020. Dynetics is a leading provider of high-tech, mission-critical services and solutions to the U.S. government. Leidos is a market leader in providing information technology, engineering, and science solutions to defense, civilian, and healthcare federal agencies. The acquisition of Dynetics will strengthen Leidos’ position in existing markets, while accelerating research within the Leidos Innovations Center to develop new technologies and solutions that address evolving customer requirements. Leidos CEO Roger Krone highlighted the innovative nature of Dynetics’ work, stating that “the addition of Dynetics will significantly increase our capabilities for rapid prototyping and agile system integration and production.” The acquisition is the third and largest for Leidos in the past 18 months (the company purchased IMX Medical Management in August 2019 and Aranea Solutions in June 2018), evidencing the Company’s commitment to its M&A strategy. This deal reflects the broader trend of public buyers seeking acquisitions that add scale and provide differentiated solutions, such as advanced engineering and prototyping, intellectual property, and embedded customer positioning within the Department of Defense and Intelligence Community.

Click to access KippsDeSanto’s 2019 Aerospace/Defense & Government Services M&A Survey

About 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.

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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 September 30, 2019.  The following table is our take on the most notable announced M&A transactions — 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 Advent International’s pending acquisition of Cobham plc (LSE:COB).  Cobham designs and manufactures equipment, specialized systems, and components for the aerospace and defense industries.  The estimated $5.16 billion transaction was announced on July 25th and required shareholder and government approval after the initial announcement.  Advent’s offer of $2.06 per share represents a 50 percent premium to the three-month average stock price.  The deal required 75 percent shareholder approval; over 90 percent of shareholders voted in favor of the transaction on September 16th, even after pushback from the Company’s largest shareholder.  Cobham’s board of directors unanimously supported and recommended the deal.  The acquisition fits Advent’s transaction history in the British electronics industry with its previous acquisition of Laird for $1.65 billion in 2018.  The deal still faces political and regulatory scrutiny after the British government served an intervention notice on national-security grounds.  The British government utilized a similar strategy for Melrose Industries plc’s acquisition of GKN plc in 2018, forcing Melrose into assurances that it would not divest key portions of GKN’s aerospace division.  The deal is expected to close by the end of 2019.

The government technology solutions deal of the quarter is Guidehouse’s acquisition of the global management consulting firm Navigant Consulting, Inc. (Nasdaq: NCI).  Navigant is a specialized professional services firm serving clients primarily in the healthcare, energy and financial services sectors. Guidehouse, a Veritas portfolio company, is a leading provider of management consulting and strategic advisory services to government clients. The combination of these two market leaders in consulting brings together complementary service offerings and deep industry expertise in both the commercial and public sectors, with a focus on supporting clients in the healthcare, financial services, energy, national security and aerospace and defense industries. Guidehouse CEO Scott McIntyre, who will lead the combined company, highlighted the forward-leaning nature of this combination, stating that “the acquisition of Navigant is the next step in our journey to create the next generation global consultancy.” The acquisition is the first for Guidehouse since its formation in May 2018 through PwC’s divestiture of its U.S. Public Sector Business to Veritas Capital. This deal reflects the broader trend of sponsors expanding their platforms’ offerings and customer base through bolt-on acquisitions of complementary targets, as seen this quarter by the sale of Connexta to Octo (Arlington Capital Partners platform) and AceInfo Solution’s acquisition by Dovel Technologies (Macquarie Capital platform).

Click to access KippsDeSanto’s 2019 Aerospace/Defense & Government Services M&A Survey

About 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.

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

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KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended June 30, 2019.  The following table is our take on the most notable announced M&A transactions — 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 the pending merger of United Technologies Corporation (NYSE:UTX) with Raytheon Company (NYSE:RTN), which was announced in early June.  After associated spinoff divestitures, the combined company will be the U.S.’ second-largest aerospace and defense company, behind Boeing, valued at more than $100 billion with annual revenue of approximately $74 billion.  The deal is structured as a merger of equals between UTC and Raytheon.  The combined entity plans to produce a wide array of products ranging from engines and seats for the F-35, to Patriot missile launchers and space suits.  The deal intensifies the consolidation in the aerospace and defense industry as plane makers seek better terms from suppliers and the U.S. government puts greater pressure on contractors to cut costs and invest in new technologies, such as space systems and cybersecurity.  The new company will be named Raytheon Technologies Corp.  UTC shareholders will own 57% of the shares and plan to appoint eight of the 15 new directors.  Raytheon shareholders will own the remaining 43% of the combined company, with current Raytheon Chairman and CEO Tom Kennedy being the designated Executive Chairman of the post-merger company.  The deal is subject to regulatory approval and is anticipated to close in the first half of 2020.

 

The government technology solutions deal of the quarter is Jacobs Engineering Group, Inc.’s (NYSE:JEC) acquisition of KeyW Holding Corporation (Nasdaq: KEYW).  KEYW is a leading national security provider of advanced engineering, cyber, and reconnaissance technology solutions for the U.S. Department of Defense “DoD,” Intelligence Community “IC,” and counterterrorism agencies.  The approximately $815 million transaction was announced on April 22nd and closed on June 11th.  Following the acquisition, JEC plans to merge KEYW with Atom Acquisition Sub, Inc., creating a new, wholly owned subsidiary of JEC to expand JEC’s Aerospace, Technology, and Nuclear capabilities and footprint.  KEYW adds proprietary command, control, communications, computers, combat systems, intelligence, surveillance, and reconnaissance (“C5ISR”) solutions to JEC’s portfolio of capabilities.  In addition, the transaction will allow JEC to offer its existing customers “a wide array of capabilities and services via a broad range of contracting vehicles,” according to Bill Webber, President and CEO of KEYW.  Since its inception in 2008, KEYW has been focused on NexGen IT capabilities for IC and DoD customers, and has supplemented organic growth with 18 acquisitions, including Sotera in 2017.  This transaction serves as another example of how large global engineering companies, such as Huntington Ingalls (NYSE: HII), Parsons Corporation (NYSE:PSN), KBR, Inc. (NYSE:KBR), and others, are expanding their reach in the government sector, seeing the Intelligence Community in particular as promising, stable, and relatively insulated areas for investment.

Click to access KippsDeSanto’s 2019 Aerospace/Defense & Government Services M&A Survey

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.

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

/in , /by

KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended March 31, 2019.  The following table is our take on the most notable announced M&A transactions — not only based on size, but also on strategic importance and / or impact.

 The aerospace and defense deal of the quarter is the acquisition of Endeavor Robotic Holdings, Inc. (“Endeavor”) by FLIR systems, Inc. (“FLIR”) from private equity firm, Arlington Capital Partners, for an estimated $385 million in cash.  Based outside Boston and formerly known as iRobot Defense & Security, Endeavor has shipped more than 7,000 unmanned ground vehicles (“UGV”) to customers in over 55 countries.  Endeavor provides battle-tested, tactical UGVs for the global military, public safety, and critical infrastructure markets.  This transaction, along with FLIR’s recent acquisitions of Aeryon Labs and PROX Dynamics, has significantly expanded FLIR’s unmanned systems capabilities and aligns with its evolution from sensors to intelligent sensing and ultimately integrated solutions.  Upon closing of the acquisition, Endeavor will be part of the FLIR Government and Defense Business Unit’s Unmanned Systems and Integrated Solutions division.  The transaction is expected to be $0.03 dilutive to FLIR’s 2019 adjusted earnings per share, due to borrowing costs associated with funding the transaction, but accretive thereafter.

The government technology solutions deal of the quarter is ManTech, Inc.’s (NASDAQ:MANT) acquisition of Kforce Government Solutions, Inc. (“KGS”), a subsidiary of Kforce, Inc. (NASDAQ:KFRC).  KGS provides high-end technology and business consulting solutions aimed at improving mission effectiveness and operational efficiencies for Federal customers, primarily at the Department of Veteran Affairs (“VA”) and Department of Defense (“DoD”).  The $115 million all cash transaction was announced on March 1st.  This acquisition significantly expands ManTech’s footprint at the VA and gives ManTech access to KGS’ prime position on the VA’s 10-year, $22.3 billion, Transformation Twenty-One Total Technology Next Generation (“T4NG”) Indefinite Delivery Indefinite Quantity (“IDIQ”) program.  KGS adds ~500 skilled employees and ~$100 million of annual revenue to ManTech.  This transaction is yet another example of strategic buyers paying premium valuations for well positioned businesses that hold key contract vehicles, like T4NG.  KippsDeSanto & Co. acted as the exclusive financial advisor to KGS on this transaction.

Click to access KippsDeSanto’s 2019 Aerospace/Defense & Government Services M&A Survey

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.

 

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

/in , /by

KippsDeSanto & Co., a leading aerospace / defense and government technology solutions investment bank, would like to share its thoughts on the “Top 10 M&A Deals of the Quarter” for the period ended December 31, 2018.  The following table is our take on the most notable announced M&A transactions — 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 the all stock merger of equals between Harris Corporation (“Harris”) and L3 Technologies, Inc. (“L3”).  Harris and L3 provide a wide array of defense technology-based solutions for global mission-critical challenges.  The combined entity will have a market cap of approximately $30 billion and the deal was announced on October 14th.  Under the terms of the deal, L3 shareholders will receive a fixed exchange ratio of 1.3 shares of Harris common stock for each share of L3 common stock.  The merged company will generate an estimated $16 billion in revenue next year, effectively forming a sixth defense prime contractor.  Strategic benefits of the merger include increased scale with a well-balanced portfolio of complementary franchises, shared culture of innovation and operating philosophies, and meaningful value creation through complementary markets and enhanced global presence.  The transaction is expected to close in mid-year 2019, pending regulatory approval from the Department of Defense.

The government technology solutions deal of the quarter is Maximus, Inc.’s (NYSE:MMS) acquisition of General Dynamics Information Technology’s (“GDIT”) Citizen Engagement Center (“CEC”).  The approximately $400 million all cash transaction was announced on October 9th and closed November 16th.  GDIT’s CEC specializes in call center support for citizens in their dealings with federal agencies, such as the CMS and the Census Bureau.  This acquisition strengthens Maximus’ position in the administration of federal government programs and bolsters the contractor’s ability to provide improved citizen services.  The CEC business will likely add between $600 million and $625 million in FY19 revenue to Maximus’ top line, with anticipated mid-single digit operating margins.  GDIT’s divestiture of its call center business follows the August sale of its Navy Systems Engineering and Acquisition Services Business Unit, acquired as part of its $9.7 billion acquisition of CSRA, Inc.  This transaction is another example of larger acquirers executing on portfolio shaping activities following consolidation and mega-mergers.

Click to access KippsDeSanto’s 2019 Aerospace/Defense & Government Services M&A Survey

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