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By Nick Wakeman

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Nick Wakeman

GD sells off sensor business

General Dynamics Corp. has sold off a small sensor business it’s owned for over a decade.

And the emphasis is on small. So small, in fact, that GD isn’t announcing it and won’t be making a filing about it with the Security and Exchange Commission. “It’s not a material transaction,” a GD spokeswoman said.

She also warned me not to read too much into GD’s desire to sell its Advanced Systems unit, a sensor business that was part of GD Advanced Information Systems.

The divestiture is just part of GD’s ongoing portfolio shaping, not any shift in strategic direction, she said. “We’re constantly looking at our portfolio,” she said.

But while the unit was unwanted and immaterial to GD, it’s an important strategic fit for the buyer, MacDonald Dettwiler and Associates Ltd., a communications and information company based in Richmond, British Columbia.

Terms of the deal were not disclosed, and the investment bank KippsDeSanto served as the advisor to GD.

MDA is folding the Advanced Systems business into MDA Information Systems, the company’s U.S. subsidiary.

The acquisition is an important part of the company’s strategy to grow in the U.S. market, “in particular to increase our radar information and systems related business,” said Daniel Friedman, MDA’s CEO.

The GD business has roots going back 50 years developing and applying radar and other information sensors. It has 170 employees and $40 million in annual revenue.

MDA Information Systems is structured as a wholly-owned subsidiary and has an independent proxy board allowing it to pursue and perform classified U.S. government work.

In addition to the defense, intelligence and U.S. civilian markets, MDA Information Systems also serves industries such as aerospace, agriculture and energy. Among its services are geospatial, ISR systems and weather services.

An MDA spokeswoman declined to disclose revenue for the U.S. business, but overall, the company had $1.8 billion in 2013 revenue, a large jump from the $880 million in revenue in 2012.

The increase came from the acquisition of the Space Systems satellite business from Loral LLC, a nearly $1 billion acquisition it closed in 2012.

Friedman said the GD acquisition and the Loral business, which goes by SSL, will fit well together.

“We believe that the unique radar information processing capability we are adding through this acquisition, together with SSL’s large space program capability, provide us with a strong platform,” he said.

For the folks with the GD business, they’ve been down this road before. Originally, they were part of the Environmental Research Institute of Michigan, a non-profit research company. They spun the business out as a for-profit enterprise known as ERIM International.

ERIM International was acquired by Veridian in 1999, and then Veridian in turn was acquired by GD in 2002.

Like a lot of companies in the federal market, they’ve been spun out, sold, bought and now sold again.

So, it looks like there is a new strategic buyer in the U.S. market, particularly when you consider the importance of satellite-based networks and sensors for the defense and intelligence sectors.

Posted by Nick Wakeman on Oct 07, 2014 at 9:23 AM

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