M&A

Lockheed acquisition centers on hypersonics growth

Lockheed Martin is making a new acquisition in its push to be a leader hypersonics and this particular deal concentrates on elements beyond just the weaponry itself.

Lockheed is purchasing the hypersonics portfolio of Integration Innovation Inc., a software and systems engineering company also known as i3. Terms of the deal announced Friday were undisclosed but all parties expect to complete the “portfolio alignment” transaction within the next 30 days.

Huntsville, Alabama-based i3’s work in hypersonics includes software development, modeling and simulation, testing, facility development and integration, weather encounter, propulsion and thermal protection.

While of a tuck-in variety, this deal falls within the parameters new Lockheed CEO James Taiclet has drawn for the company to make acquisitions.

In his first earnings call as chief executive on July 21, Taiclet indicated that Lockheed could look for opportunities to acquire assets or form joint ventures with other companies in a possible defense spending downturn scenario.

Hypersonics may not be a part of that downturn from the Defense Department’s point of view. DOD’s budget request for fiscal year 2021 asked for $3.2 billion in hypersonic research, up from $2.6 billion in fiscal 2020.

Lockheed certainly has been one company seeking larger pieces of that pie to position for programs of record, of which DOD has not established any yet but could in the middle of this decade.

In a Jan. 28 earnings call, Lockheed Chief Financial Officer Ken Possenriede told investors the company had booked at least $4 billion in hypersonics contracts during 2019.

Investment bank Houlihan Lokey was the financial adviser to i3 on the transaction, while Maynard Cooper was legal adviser and also on the sell side.

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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