We return to work with a familiar start: six M&A deals

WT opens for business again to start 2021 and our first day back on the job already looks a lot like 2020 in that we have six announced or completed acquisitions to run through.

Today (Monday) is only the first official work day of 2021, which is already looking like 2020 when it comes to mergers and acquisitions in the government market.

Here is a rundown of six deals announced or completed over the past week as WT re-opens for business again after a holiday hibernation.

Vectrus

  • What was acquired Zenetex, first announced Dec. 28 and completed on New Year’s Eve.
  • What is being paid: $112 million, net of $11 million in expected tax benefits.
  • Who the target is: A provider of IT, logistics, engineering, communications and other services to U.S. government and allied military customers with a more-than $700 million backlog
  • What the buyer gets: Expands operations overseas to at least 40 countries that Zenetex works in and advances the Navy campaign to include Naval Air Systems Command and Naval Supply Systems Command.
  • Who helped make the deal happen: Skadden, Arps, Slate, Meagher & Flom LLP; Ernst & Young; Covington & Burling LLP; and Wolf Den Associates advised Vectrus. KippsDeSanto & Co. and Greenberg Traurig LLP advised Zenetex.

Vectrus (again)

  • What was acquired: HHB Systems, announced Monday.
  • What is being paid: Undisclosed amount of cash and credit
  • Who the target is: A provider of IT-enabled asset management and logistics services to intelligence community agencies.
  • What the buyer gets: 50 employees of whom 90 percent have Top Secret or higher clearances and an expanded set of physical and digital infrastructure management offerings.
  • The backstory in both Vectrus deals: Pushing to be a leader in converged infrastructure, where digital tools are used as a lever to support mission areas such as base operations and supply chain management.

Huntington Ingalls Industries

  • What was acquired: The autonomy business of Spatial Integrated Systems and completed on New Year’s Eve.
  • What is being paid: Terms are undisclosed.
  • Who the target is: A maker of technologies focused on multi-vehicle collaborative autonomy, sensor fusion and perception for unmanned surface vehicles.
  • What the buyer gets: 50 employees that develop solutions for coordinating and controlling multiple collaborative unmanned vehicles.
  • Who is joining: Sam Lewis, president and chief operating officer of SIS, will lead HII’s unmanned surface vessel work.
  • The backstory: HII’s push to be an unmanned maritime leader included last year’s acquisition of Hydroid, equity investment in Sea Machines and groundbreaking on a new unmanned center of excellence.

Teledyne Technologies

  • What is being bought: FLIR Systems, announced Monday and anticipated to close in the middle of this year pending regulatory and shareholder approvals.
  • What is being paid: $7.36 billion, an all-time record price for Teledyne and not including the assumption of FLIR’s debt.
  • Who the target is: A maker of imaging, robotic and other sensory technologies for government and certain commercial industrial applications that has used acquisitions to grow the  unmanned business.
  • What the buyer sees it becoming: A $5 billion pro forma revenue entity with greater capacity to make sensors for different types of platforms, plus unmanned and autonomous systems for various domains.
  • Who is working the deal: Evercore and McGuireWoods LLP are advising Teledyne. Goldman Sachs and Hogan Lovells US LLP are advising FLIR.
  • How investors are reacting: FLIR’s stock soared 19 percent in late afternoon trade but Teledyne’s was down 7 percent.

Quantitech

  • What was acquired: Systems Engineering Group (“SEG”) formerly a part of Griffon Corp, announced Monday.
  • What is being paid: Terms are undisclosed
  • Who the target is: A provider of threat engineering and modeling and simulation services to U.S. military customers such as the Naval Surface Warfare Center, Missile Defense Agency and Office of Naval Intelligence.
  • What the buyer gets: Additional services to support programs involving weapons and missile systems development, simulation, testing and analysis.
  • Who helped make the deal happen: Paul, Weiss, Rifkind, Wharton & Garrison LLP was legal adviser to QuantiTech. Chertoff Capital and Dechert LLP both advised Griffon.
  • The backstory: QuantiTech is backed by private equity firm Sagewind Capital and this is its second acquisition made with that support.

Mercury Systems

  • What was acquired: Physical Optics Corp, first revealed Dec. 7 and announced as completed Dec. 30.
  • What is being paid: $310 million in cash and credit
  • Who the target is: A maker of data transfer systems, flight data recorders, mission computers, high-definition data and video recorders and advanced encryption devices.
  • What the buyer gets: Increased access to platform and mission management content technologies for use in defense applications such as those involving digital convergence.
  • The backstory: Mercury has been one of the defense technology arena's most active acquirers, including four deals closed in 2019 that preceded this most recent transaction for POC.
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