Kratos Acquires Mystery Security & Public Safety Business for $20 Million
Kratos Defense & Security Solutions Inc., San Diego, a national security solutions provider, announced that it acquired selected assets of an unnamed critical infrastructure security and public safety system integration business from a large international public company. Speculation around the industry points to Ingersoll Rand Security Technologies, but neither company confirmed the rumors. A source at Ingersoll Rand said, “the integration business within Ingersoll Rand...was recently sold and is no longer a part of IR.” Last year that business ranked as No. 12 on SDM’s Top Systems Integrators Report.
Kratos did note the acquired business is one of its Public Safety & Security (PSS) business unit’s primary competitors across the United States. Similar to Kratos’ PSS business, the acquired business designs, engineers, deploys, manages and maintains specialty security systems at some of the United States’ most strategic asset and critical infrastructure locations. Approximately 15 percent of the acquired business’ revenues are recurring in nature due to the operation, maintenance or sustainment of the security systems once deployed.
For 2012, the acquired business is expected to generate at least $35 to $45 million in revenue. The acquired business has more than $20 million in customer accounts receivable and approximately $18 million in working capital. Kratos will also receive a tax benefit from the acquisition. The purchase price paid by Kratos for the business is $20 million in cash, subject to potential adjustment for working capital at closing, and the purchase agreement contains standard and typical indemnifications and other provisions. The acquisition is expected to be accretive to Kratos.
Eric DeMarco, president and chief executive officer of Kratos, said, “With the completion of this transaction, approximately 50 percent of Kratos’ business is in the growing cyber warfare, critical infrastructure security and satellite communications areas, with an additional approximately 35 percent of our business focused on the solidly funded areas of electronic warfare, electronic attack, C5ISR, BMD and missile programs.”