WT Business Beat

By Nick Wakeman

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Fly like an Eagle

There's more than meets the eye behind Boeing's acquisition of unmanned aerial systems maker Insitu Inc.

Insitu's primary offering is the 125-pound unmanned reconnaissance system known as ScanEagle, which has conducted countless reconnaissance missions in Afghanistan and Iraq. For Boeing, the acquisition "is part of a larger plan to aggressively grow our presence in the unmanned systems market," said Chris Chadwick, president of Boeing Military Aircraft.

The aerospace giant plans to establish Insitu as a wholly owned subsidiary of its military aircraft unit, which is part of Boeing's Integrated Defense Systems division based in St. Louis. In our news brief we noted that Boeing and Insitu had collaborated for the past six years on ScanEagle.

In the Pacific Northwest region, where Insitu is nestled along the Columbia River in the town of Bingen, Wash., two newspapers ? the Oregonian and the Seattle Post Intelligencer ? scratched beneath the surface of the press releases put out by both companies and found that not only was Insitu weighing an initial public offering at the time of acquisition, but also that the acquisition will give Insitu the financial backing necessary to pursue a large joint Navy and Marine Corps contract for an unmanned aerial system called Small Tactical Unmanned Air Systems/Tier II (STUAS/TIER II). In addition to Boeing, a number of other defense titans ? BAE Systems Inc., Lockheed Martin Corp., Northrop Grumman Corp. and Raytheon Co. ? are interested in landing the prime contract.

Insitu CEO Steve Silwa had to choose between an IPO and selling the company, according to the Post-Intelligencer. Believing that selling the company to a buyer like Boeing would enable Insitu to better serve its customers, he opted for selling the company and a deal was struck.

Although Boeing did not put in its press release the financial terms of the transaction, the Oregonian reports the aerospace giant paid just under $400 million for Insitu. Boeing said that Insitu expects to generate $150 million in revenue this year.

The Naval Air Warfare Center Aircraft Division at Patuxent River is crafting a solicitation for STUAS/TIER II expected to be released in September. The project likely will entail the design and production of three unmanned aerial systems operated from a ground control station with multi-mission capabilities. Project cost estimates were not available.

The acquisition, given the long-term partnership between the two companies, was a logical one.

Posted by William Welsh on Jul 28, 2008 at 7:22 PM


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