Mercury's board ends formal sale process, appoints interim CEO
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By
Ross Wilkers
This leadership transition comes nearly a year after the company signed cooperation agreements with a pair of activist investors.
Mercury Systems' formal effort to find a buyer is over for the time being, nearly five months after the defense electronics manufacturer started a review of "strategic alternatives" for itself.
The board of directors' decision to stay the course on Mercury's current plan was not the only key announcement out of the company after markets closed Friday.
Chief Executive Mark Aslett has resigned from his position after nearly 15 years at the helm and has also left the board of directors. Mercury's board has appointed an interim CEO in Bill Ballhaus, a member of Mercury's board and also a former CEO of two government services companies: SRA International and DynCorp International.
Ballhaus joined Mercury's board in 2022 in connection with a pair of cooperation agreements with Jana Partners and Starboard Value, both activist investors that have reputations for pushing changes at companies in which they buy stock. Sometimes that push can result in a sale of the entire company or pieces of it.
In Mercury's third quarter financial report, the company lowered its profit guidance by almost 20% to a range of $160 million-to-$170 million in adjusted EBITDA — earnings before interest, taxes, depreciation and amortization. Continued supply chain delays and shifts to fixed-price development work were among the factors Mercury cited in that revision.
Mercury is a supplier of onboard processors, avionics and microelectronics to other larger defense hardware companies.
In the process to find a buyer, Mercury said its financial advisers Citi and Goldman Sachs contacted at least 40 parties and signed confidentiality agreements with 20 of them.
Mercury's board decided none of the offers properly valued the company, so the panel voted to end that formal process and instead focus on what the company called "all potential opportunities to create value."
Andover, Massachusetts-headquartered Mercury also is working to finalize its appointment of a new chief financial officer and announce that in the coming weeks, after having identified the person it wants to hire.
That person would succeed Michael Ruppert, who left Mercury in February for the CFO role at ManTech.
In addition to the CEO and CFO transitions, Mercury's board is slated to have a new chairman, as William O'Brien plans to retire from the panel. The board has in the meantime elected a new member in Jerry DeMuro, a former CEO of BAE Systems' U.S. subsidiary, with plans to add and announce a second "former CEO of an aerospace defense contractor" in the coming weeks.