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 14^th.  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 9^th and closed November 16^th.  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

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 & 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, 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.

Click here to download the table above 

Of the above transactions, the following were especially noteworthy:

The aerospace / defense deal of the quarter is Boeing Co.’s acquisition of KLX, Inc. (NASDAQ:KLXI). KLX primarily provides aerospace fasteners, consumables, and logistics services worldwide through its
Aerospace Solutions Group, which generated 90% of total sales in its most recent fiscal year. KLX’s Energy Services Group made up the remaining 10% of revenue, and Boeing plans to divest the business unit
before closing the deal. The transaction values the Aerospace Solutions Group at a multiple of 15.7x LTM.

(1) KippsDeSanto & Company is not affiliated with any other company mentioned herein
(2) Source: KLX Press Release on May 1, 2018

EBITDA(2) for FY2017 and values the entire business at $4.2 billion, representing 14.7x LTM EBITDA. KLX will operate as part of Boeing’s expanding aircraft services business, Boeing Global Services, and will be
fully integrated with Boeing’s parts subsidiary, Aviall. The acquisition continues Boeing’s strategic push into the highly profitable aftermarket and MRO sector, as Boeing continues to make acquisitions along its
vertical supply chain. The transaction is expected to generate $70 million in cost-savings by 2021, and Boeing plans to finance the acquisition through a combination of cash on hand and $1.0 billion of net
debt.

The government technology solutions deal of the quarter is SOS International’s (“SOSi”) acquisition of STG Inc. The approximately $83 million all cash transaction closed on April 11th. The deal took place
approximately one year after STG’s failed transaction with Preferred Systems Solutions, and nearly five months after STG’s parent company, STG Group, was taken over by creditors. This marks the third and
largest acquisition in three years for SOSi, the Reston-based government services integrator, which also acquired Defense Group Inc., in September 2017, and New World Solutions, in January 2016. STG expands
SOSi’s capabilities across mission-critical technology, cyber, and data solutions. SOSi, with the addition of STG, now has 1,300 employees worldwide. STG also holds the Alliant 2 and Eagle II contracts, among
others, that provide SOSi with an ability to expand its customer base and pursue previously unavailable opportunities. This transaction highlights continued consolidation and capability expansion strategies
amongst mid-tier firms. Moreover, SOSi showcased deal ingenuity in its ability to navigate the complicated ownership and creditor dynamics of STG. As a result of this deal, the SOSi / STG combination
establishes a highly formidable mid-sized IT player with enhanced IT capabilities and footprint.

Click here to access KippsDeSanto’s 2018 Aerospace/Defense & Government Services M&A Survey

About KippsDeSanto & Co.: KippsDeSanto & Co. is an investment bank focused on delivering exceptional results for leading, growth-oriented aerospace / defense and technology companies. We leverage our
creativity and industry experience to provide M&A, private financing and strategic consulting. Capitalizing on real-time industry trends and in-depth technical and strategic analysis, our solutions-driven approach
is highly structured and uniquely tailored to each client. KippsDeSanto is recognized for its market insight and broad industry relationships. We help market leaders realize their full strategic value. KippsDeSanto,
member FINRA/SIPC, is not affiliated with other companies mentioned herein. For more information, visit www.kippsdesanto.com.

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, 2017.  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.

Click here to download the table above

Of the above transactions, the following were especially noteworthy:

The aerospace and defense (“A&D”) deal of the quarter is Mercury’s announced acquisition of Themis Computer, Inc.  The proposed acquisition is an all cash deal worth $180 million, in excess of 3x 2017E revenue and approximately 14x 2017E EBITDA.  The deal is expected to be immediately accretive to Mercury’s earnings and will be financed through Mercury’s existing revolving credit facility.  Themis Computer is a leading designer, manufacturer, and integrator of commercial, SWaP-optimized rugged servers, computers, and storage systems that serve some of the largest Navy and Army server programs in the U.S. Department of Defense (“DoD”) as well as international defense programs.  The acquisition will provide Mercury with a strategic platform acquisition that will enable Mercury to continue penetrating the Command, Control, Communications, Computers, and Intelligence (“C4I”) market and provide important new capabilities for its customers.

The government technology solutions deal of the quarter is the announced merger between DXC Technology’s U.S. Public Sector (“USPS”) business, Vencore Holding Corporation, and KeyPoint Government Solutions.  DXC Technology was formed in April 2017, through the merger of Hewlett Packard’s Enterprise Services division and what remained of Computer Sciences Corporation, following the spinoff of its government services business to SRA International, which became CSRA Inc.  Vencore is a provider of information solutions, engineering, and analysis to the U.S. Intelligence Community, the Department of Defense, and federal and civilian agencies worldwide, and KeyPoint is a provider of specialized investigative and risk mitigation services to the U.S. Federal Government.  DXC is spinning off its USPS business to combine it with Vencore and KeyPoint to create a competitive, large-scale, government-focused IT services provider.  The proposed transaction will be tax-free to DXC and its shareholders through a Reverse Morris Trust transaction structure, which is the same structure used for the formation of DXC as well as Leidos’ acquisition of Lockheed Martin’s IT business in 2016.  The DXC USPS deal is expected to close by March 31, 2018, and the still-unnamed, public, combined entity will have 14,000 employees and ~$4.3 billion in annual revenue.  DXC shareholders will own 86% of the combined business and receive $1.05 billion of cash upon closing.  Veritas Capital, the prominent private equity firm that owns both Vencore and KeyPoint, will retain approximately 14% of the combined entity’s equity and receive $400 million of cash at closing.  This transaction follows the recent trend of mega-mergers (~$1 billion in revenue) across the government technology solutions landscape and is the third of its kind behind CACI’s acquisition of L-3’s NSS business unit and Leidos’ acquisition of Lockheed Martin’s IT business.