Securitas, No. 4 on SDM’s Top Systems Integrators Report, has agreed to acquire the division Kratos Public Safety and Security, No. 5 on the Top Systems Integrators Report, from Kratos Defense & Security Solutions Inc. The purchase price is approximately $69 million on a cash and debt-free basis. The acquisition is expected to be neutral to Securitas earnings per share in 2018 and 2019, and accretive as of 2020.
Kratos Public Safety and Security (KPSS) includes 400 employees. The primary focus is electronic security projects for commercial customers with special expertise in transportation, petrochemical, healthcare, and education vertical markets. The business provides design, engineering, installation and service of advanced integrated security technology and systems. KPSS has a wide breadth of capabilities including access, video, intrusion, and fire solutions supported by on-going maintenance, inspections, and monitoring services.
Kratos expects to ultimately receive approximately $70 million of net cash proceeds from the transaction, after taking into account amounts to be paid by Kratos pursuant to a negotiated transaction services agreement between the two companies, receipt by Kratos of approximately $7 million in estimated net working capital to be retained by Kratos, and associated transaction fees and expenses. The transaction is expected to close by about June, 2018, subject to normal and customary closing conditions and regulatory approvals.
KPSS, which is to be combined with Securitas Electronic Security Inc., aligns well with Securitas Electronic Security’s current operations and strategic focus, Securitas reported in a press release. The acquisition will expand Securitas’ electronic security platform in the U.S. by strengthening field operation capabilities and adding local branch infrastructure with highly skilled employees. It supports Securitas’ strategy of providing protective services across the entire Securitas North American customer base.
“This acquisition supports Securitas´ global strategy and strengthens our position as the global knowledge leader in protective services,” said Alf Göransson, president and CEO, Securitas AB.
“The market dynamics in the United States are strong and Securitas is growing faster than the U.S. security market. ... This acquisition will further strengthen our position as the leader in protective services in the United States,” said Santiago Galaz, divisional president Securitas Security Services North America.
Eric DeMarco, Kratos president and CEO, said, "The sale of PSS virtually completes the successful execution of Kratos' strategy to be a pure play defense high technology, product and systems provider. This divestiture will allow us even greater focus on our high growth core businesses including unmanned aerial drones, satellite communications, missile defense, training systems and microwave electronics."
Canaccord Genuity is serving as exclusive financial advisor to Kratos in connection with the transaction and Paul Hastings LLP is serving as legal counsel.
Closing of the acquisition is subject to regulatory approval, and is expected during second quarter of 2018, from which point it will be consolidated in Securitas.