Industry Week in Review – May 20, 2011
Secretary Gates revealed details earlier in the week about the DoD review of missions and capabilities ordered last month by President Barack Obama to shape a $400 billion, 12-year cut to security spending. The review will focus on generating additional efficiencies, examining programs that dramatically increase operating costs, reducing / eliminating “marginal missions and marginal capabilities,” and specifying modifications to the Quadrennial Defense Review (QDR) strategy. According to Secretary Gates, the ultimate goal is to “preserve a U.S. military capable of meeting crucial national security priorities, even if fiscal pressure requires reduction in the force’s size.”
Notes on some big movers:
Integral Systems Inc. (Down 8.0%): Shares fell for the week following the announcement on Monday that the Company agreed to be acquired by Kratos Defense & Security Solutions Inc. (see additional details below)
Notes on some relevant transactions:
Camber announced on Thursday that it has acquired EADS North America Defense Security and Systems Solutions, Inc. (“DS3”), a leading provider of cybersecurity, information assurance, information technology, and secure satellite communication services for strategic customers in the Department of Defense and Joint Command communities. The acquisition further deepens Camber’s National Security Group’s cybersecurity services and the Aerospace Defense Group’s information technology and secure satellite communications capabilities.
SAIC announced on Monday that it has acquired the transmission and distribution engineering capabilities of Patrick Energy Services, a provider of performance-based transmission and distribution power system solutions. The acquisition will enable SAIC to better serve customers including investor owned utilities, public power providers, and transmission operators.
Kratos announced on Monday that it has entered into a definitive agreement to acquire all of the outstanding stock of Integral Systems, Inc., a leading provider of satellite system command and control software, signal monitoring, telemetry, interference identification, and military range processing products and solutions. The enterprise value will be approximately $266.4 million (cash and stock), with Integral Systems generating LTM revenues as of April 1, 2011 of $197.7 million (1.35x), and pro forma EBITDA of $30 million (8.9x).