M&A

Mercury inks $180M deal for Themis in continued C4I push

Mercury Systems said Thursday it has agreed to acquire ruggedized technology manufacturer Themis Computer for $180 million in cash to become a larger provider of servers for the Army and Navy.

The companies expect to close the transaction by the end March, pending customary closing conditions such as antitrust reviews.

Mercury CEO Mark Aslett said in a statement Thursday the company envisions Themis as a strategic platform to make further acquisitions to expand further into the C4I market -- command, control, communications, computers and intelligence.

Andover, Mass.-based Mercury has been on an acquisition spree in the mission computing and electronic warfare arenas in recent years. The company added both Richland Technologies and Delta Microwave earlier this year.

In between those deals, Mercury expanded its revolving credit line for more room to make acquisitions and paid down the remainder of a loan with cash on hand. Themis is the first acquisition under Mercury’s five-year, $400 million revolving credit line expanded in June.

Other deals within the past three years have included those for Creative Electronic Systems, Microsemi Corp. and Lewis Innovative Technologies.

Mercury has spent approximately $575 million on six acquisitions over the past two years including for Themis, according to the company.

Themis is a maker and integrator of commercial ruggedized servers, computers and storage systems for U.S. and international defense programs. Its U.S. customers include all four military branches, plus the Coast Guard and Army National Guard.

The company touts its technologies as being of use in missile systems, unmanned aerial vehicles, radars and combat management systems.

Tysons Corner, Va.-based investment bank KippsDeSanto advised Themis on the transaction.

Fremont, Calif.-based Themis expects to report $57 million in revenue for this year and a 23 percent margin on adjusted earnings before interest, taxes, depreciation and amortization expenses. Mercury said it valued Themis at roughly 13 times adjusted EBITDA pre-synergies, which are currently estimated to be $1 million.

Mercury is targeting adjusted EBITDA margins of between 22 percent and 26 percent over the long term and will also bring its net debt ratio to 1.5 times EBITDA, they said.

Shares in Mercury have climbed 76.6 percent since the start of this calendar year.

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.

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