M&A

KeyW builds intell footprint as Sotera buy closes

Acquisition positions firm as largest pure play intell provider

KeyW Holding Corp. has closed its $235 million cash purchase of Sotera Defense Solutions to nearly double in size and create an engineering and technology services contractor serving the intelligence community and other national security agencies.

At $535 million in projected annual revenue, KeyW becomes the largest publicly traded company whose main focus is on the intelligence community. As previously covered here in February, KeyW’s footprint in the 16-agency IC also climbs to 60 percent from 25 percent.

Sotera contributes $225 million to KeyW through work with national security agencies in the Defense and Homeland Security departments, civilian and federal law enforcement arenas. Sotera also adds 11 new IDIQ contract vehicles to KeyW with three of them overlapping between both companies.

Key technology focus areas for KeyW include cybersecurity, cloud computing, data analytics, geospatial, machine learning and sensors.

Hanover, Md.-based KeyW now has nearly 2,100 employees with 1,100 from Sotera and 80 percent of the total workforce holds security clearances at Top Secret and above.

KeyW CEO Bill Weber and Chief Finance Officer Mike Alber will continue in their roles. Alber joined KeyW as CFO in June 2016 and previously held that CFO role at Engility from the latter’s 2012 initial public offering through 2015.

Alber’s tenure at Engility included the contractor’s acquisition of TASC in 2015. That deal was one of the first in a recent period of consolidation for the government services market that included Leidos’ combination with Lockheed Martin IS&GS and CACI International’s buy of L-3 National Security Solutions.

KeyW financed the transaction with cash from a secondary stock offering, a five-year term loan for $135 million and $50 million credit. Nearly $3.5 million in cost synergies are targeted for this year and approximately $7 million within 12-18 months.

The company projects adjusted earnings before interest, taxes, depreciation and amortization at $55 million for 2017 before synergies.

That puts KeyW’s debt at 4.4 times adjusted EBITDA. KeyW’s stock traded up 1.2 percent to $9.04 in morning trade. The company’s total market value is approximately $444.1 million.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Our databases track awards back to 2013. Read More

  • Navigating the trends and issues of 2016 Nick Wakeman

    In our latest WT Insider Report, we pull together our best advice, insights and reporting on the trends and issues that will shape the market in 2016 and beyond. Read More

contracts DB

Washington Technology Daily

Sign up for our newsletter.

I agree to this site's Privacy Policy.