Acquisition of US defence engineering services
Acquisition of US defence engineering services specialist
24 October 2017
Serco Group plc
LEI: 549300PT2CIHYN5GWJ21
Serco Group plc ('Serco' or 'the Group'), the international service company, has reached agreement to acquire BTP Systems LLC ('BTP'), a provider of satellite communication and radar engineering technical services to the US defence industry. The business is to be acquired on a cash-free, debt-free basis for $20m, with the consideration to be satisfied using Serco's existing debt facilities. The acquisition, subject to required approvals, is expected to complete around the end of the year.
BTP has deep capabilities within the satellite and radar industries, where it provides maintenance, repair and overhaul, testing facilities, and related systems and field engineering services. These services complement Serco's existing Ship & Shore Modernisation work and enhance our capability in 'C5ISR' (Command, Control, Communications, Computers, Combat Systems, Intelligence, Surveillance and Reconnaissance). In particular, BTP's in-service engineering and related capabilities, when combined with Serco's existing installation services, will create a full end-to-end capability to sustain systems throughout their life cycle. Major customers of BTP include the Space and Naval Warfare Systems Command ('SPAWAR'), the Naval Supply Systems Command ('NAVSUP') and Hill Air Force Base in Utah.
BTP has grown strongly over the 14 years since it was founded. Revenue for 2017 is expected to be approaching $20m and EBITDA approximately $3m. There will be a limited amount of transaction and integration costs, after which the acquisition is still expected to be immediately accretive to earnings. Serco guided to leverage for covenant purposes of between 1.4 and 1.8x EBITDA at the end of 2017; on an underlying pro forma basis this transaction would increase leverage by approximately 0.1x. The value of BTP's gross assets, excluding cash balances, is approximately $3m.
Commenting on the acquisition, Rupert Soames, Serco Group Chief Executive, said: "This acquisition adds deep expertise in satellite and radar engineering services, which complements Serco's existing defence business particularly in relation to C5ISR work and our Ship & Shore Modernisation, radar and other base support services. BTP operates in a growing segment of the market and through its combination with Serco we will be able to target additional revenue and cost synergies. We welcome our new colleagues joining Serco and look forward to working together as we further develop our scope, scale and excellent reputation in the US defence sector."
Ends
For further information please contact Serco:
Stuart Ford, Head of Investor Relations T +44 (0) 1256 386 227
Marcus De Ville, Head of Media Relations T +44 (0) 1256 386 226
About Serco
Serco is a leading provider of public services. Our customers are governments or others operating in the public sector. We gain scale, expertise and diversification by operating internationally across five sectors and four geographies: Defence, Justice & Immigration, Transport, Health and Citizen Services, delivered in UK & Europe, North America, Asia Pacific and the Middle East.
More information can be found at www.serco.com
Forward looking statements
This announcement contains statements which are, or may be deemed to be, "forward looking statements" which are prospective in nature. All statements other than statements of historical fact are forward looking statements. Generally, words such as "expect", "anticipate", "may", "should", "will", "aspire", "aim", "plan", "target", "goal", "ambition" and similar expressions identify forward looking statements. By their nature, these forward looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Factors which may cause future outcomes to differ from those foreseen or implied in forward looking statements include, but are not limited to: general economic conditions and business conditions in Serco's markets; contracts awarded to Serco; customers' acceptance of Serco's products and services; operational problems; the actions of competitors, trading partners, creditors, rating agencies and others; the success or otherwise of partnering; changes in laws and governmental regulations; regulatory or legal actions, including the types of enforcement action pursued and the nature of remedies sought or imposed; the receipt of relevant third party and/or regulatory approvals; exchange rate fluctuations; the development and use of new technology; changes in public expectations and other changes to business conditions; wars and acts of terrorism; and cyber-attacks. Many of these factors are beyond Serco's control or influence. These forward looking statements speak only as of the date of this announcement and have not been audited or otherwise independently verified. Past performance should not be taken as an indication or guarantee of future results and no representation or warranty, express or implied, is made regarding future performance. Except as required by any applicable law or regulation, Serco expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in Serco's expectations or any change in events, conditions or circumstances on which any such statement is based after the date of this announcement, or to keep current any other information contained in this announcement. Accordingly, undue reliance should not be placed on the forward looking statements.
This information is provided by RNS
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