Engineered Support Systems to acquire Radian

Engineered Support Systems Inc. of St. Louis, announced March 8 it intends to buy Radian Inc. for $42 million in cash and company common stock.

Radian of Alexandria, Va., supplies engineering, logistics support and systems integration services to the Department of Defense. The acquisition of Radian should be immediately accretive to earnings, said Michael Shanahan, chairman and chief executive officer of Engineered Support Systems.

Houlihan Lokey Howard & Zukin, an international investment bank, advised Radian and negotiated the deal.

Radian employs approximately 350 and operates from facilities adjacent to several key U.S. military installations and at the Pentagon. Radian had revenue of $53 million in 2001.

Engineered Support Systems employs about 2,100. The company supplies high-tech, integrated military electronics, support equipment and logistics services for all branches of the U.S. armed forces and some foreign militaries. The company also serves commercial customers.

The acquisition will expand ESS' presence in the market for logistics support services, Shanahan said.

"With a number of base closures and the related reduction in military personnel over the past decade, America's armed forces have increasingly turned to defense contractors to supply critical services for the design, development and ongoing logistics support of military equipment," Shanahan said. "Radian's outstanding reputation and vast expertise in these areas, as well as in the security and asset protection area, would significantly strengthen our company's capabilities and market growth opportunities."

Under their nonbinding letter of intent, neither Engineered Support Systems nor Radian is obligated to complete the transaction, which is subject to the completion of satisfactory due diligence on Radian and the negotiation and execution of a definitive purchase agreement. However, ESS expects to complete the transaction within 60 days.