M&A

Mercury to pay $100M for area display maker

Mercury Systems has made another acquisition in a continuation of its story to build more of an end-to-end portfolio of processing and other subsystem technologies for integration onto larger military platforms.

In its fourth quarter earnings release Tuesday, Mercury said it will pay $100 million to acquire American Panel Corp., a maker of large area displays for various types of fighter jets, Army Apache helicopters and M1A2 Abrams tanks. Both companies expect to close the transaction in the first quarter of its current fiscal year that started July 1.

The addition of APC brings the total amount of capital Mercury has deployed for acquisitions to nearly $800 million for 11 deals in the last five years, Mercury CEO Mark Aslett said Tuesday in an earnings call with investors. That includes $228 million in purchases over the past 12 months for five transactions.

“Acquiring APC will enable us to compete for large avionics opportunities as well as play a more significant role in military digital convergence,” Aslett said in the call to discuss fourth quarter and full-year fiscal 2019 results.

APC generated $36 million over the 12-month period ended June 30 with 80 percent of those sales in the defense market.

Mercury’s dealmaking is one piece of the Andover, Massachusetts-based company’s push to become a stronger second-tier supplier in the defense market and provider of pre-integrated subsystems to customers that can be more easily ported onto their platforms.

That thrust included three other transactions focused on avionics processing: the 2016 purchase of CES and 2017 buy of Richland Technologies, then the January deal for GECO Avionics. Aslett told analysts Mercury intends to combine APC with those other acquisitions.

“We're looking to be able to provide, a full set of capabilities in the avionics suite and to do that providing it to our existing customers,” Aslett said.

“What we see happening is… this de-layering occurring that certain companies in the space would actually like to deal directly with companies at the tier two as opposed to buying a complete, fully integrated tier-one solution.”

The acquisitions helped Mercury break the $600 million revenue milestone in its most recent fiscal year. Sales climbed 33 percent for its FY 2019 to $654.7 million. Excluding acquired revenue, organic revenue hit $541.5 million to register 12-percent growth on that front.

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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