Engineered Support Systems finishes Radian buy

Engineered Support Systems Inc. of St. Louis announced May 13 it completed its acquisition of Radian Inc. for $41.7 million in cash and Engineered Support Systems common stock.

The acquisition should be immediately accretive to the earnings of Engineered Support Systems, said Michael Shanahan Sr., chairman and chief executive officer.

"Radian provides us with a greatly expanded presence in the rapidly growing markets for logistics support services and security/asset protection systems," he said. Radian of Alexandria, Va., supplies engineering, logistics support and systems integration services to the Department of Defense.

In 2001, Radian had $53 million in revenue. The company employs 350 and operates from facilities adjacent to several key U.S. military installations and at the Pentagon. Los Angeles-based investment bank Houlihan Lokey Howard & Zukin was exclusive adviser to Radian.

The purchase price of $41.7 million for all of the outstanding stock of Radian included the payment of $37.5 million in cash, the issuance of $2 million in Engineered Support Systems common stock and the cash-out of options in the amount of $2.2 million.

Engineered Support Systems used existing cash balances and borrowings under its current credit agreement to fund the acquisition.

In addition to its capabilities in engineering services, logistics and asset protection, Radian is the prime contractor on a multiyear, $300 million contract with the Air Force for the Deployable Power Generation and Distribution system.

The system adapts and integrates commercially available hardware components into a power generation and distribution system, suitable for rapid worldwide deployment as the next-generation, air-transportable, lightweight electrical power system. It can be used in various missions, including operation of remote military bases and for disaster relief.

The Radian contract will supplement the ESS portfolio of multiyear contracts for production of a family of tactical quiet generators ranging from five to 200 kilowatts in power, making ESS a leader in supplying mobile electric power to the military, Shanahan said.

"We expect to continue to seek out other growth opportunities in power generation and related areas," Shanahan said.

Including the acquisition of Radian, the Engineered Support Systems' total contract backlog exceeds $1.2 billion.

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