Serco acquires QinetiQ's US business
Summary by AI BETAClose X
Serco expands defence capabilities with acquisition of QinetiQ’s US business
Serco Group plc (“Serco” or the “Company”)
12 November 2026
Serco Inc., a subsidiary of Serco Group plc, has agreed to acquire QinetiQ Group plc’s US business (“QQUS”) for a total cash consideration of $292m (£218m), representing a purchase price of $237m for the operating business and a $55m acquired tax benefit. QQUS is a specialised provider of engineering, technology and mission support to the US defence and national security markets. Its capabilities support some of the US Government’s most critical missions, including integrating satellite constellations for secure communications and missile tracking, operating airborne radar surveillance of US borders, and providing robotics and naval control systems.
The acquisition builds on Serco’s US defence platform and follows four defence-focused acquisitions since 2018, most recently, the successful integration of MT&S in 2025. QQUS further increases Serco’s scale and customer access in the world’s largest defence market. It significantly broadens our position with the US Space Force and adds complementary technology, including advanced sensor, imaging and target-recognition systems, as well as control solutions used to launch and recover aircraft from US Navy carriers. These capabilities deepen our position with the US Army and Navy.
Attractive financial profile
- In calendar year 2027, Serco expects QQUS to generate revenue of approximately $370m (£276m) and underlying operating profit of $21m (£16m).
- Cash consideration of $292m (£218m) comprises approximately $237m (£177m) for the operating business and an acquired tax asset valued at $55m (£41m) on a net present value basis. This tax benefit is expected to deliver over $100m of cash tax savings over 12 years.
- Run-rate cost synergies of at least $3m are expected by 2028.
- Implied acquisition multiple of 9.9x¹, based on the $237m consideration for QQUS’ operating business and including run-rate synergies. This excludes the $55m tax benefit acquired and acquisition and integration costs of around $9m.
- Accretive to underlying earnings per share in the first full year of ownership, 2028.
- Return on invested capital expected to meet the Group’s weighted average cost of capital in the third full year of ownership and exceed it thereafter.
- Cash consideration of $292m (£218m) will be funded from existing cash and committed debt facilities. The acquisition adds around 0.6x to leverage, which will remain comfortably within the target range of 1-2x following the transaction, and reduce thereafter.
- Completion is expected in the first quarter of 2027, subject to customary conditions, including receipt of relevant US regulatory and security approvals.
- Serco’s existing share buyback, which was increased to £150m in August and is due to complete in December 2026, will continue as planned.
Commenting on the acquisition, Anthony Kirby, Serco Group Chief Executive, said:
“This acquisition of QQUS builds on the successful integration of MT&S and is another important step in the development of our North American defence platform. QQUS is a strong fit with our Group strategy, adding in-demand capabilities in fast-growing areas such as space, intelligence, surveillance, and reconnaissance. It also expands our customer base and pipeline of opportunities in the US, bringing 800 skilled colleagues delivering critical missions for the US military and federal government.
“QQUS has strong customer relationships, technology-focused capabilities, excellent performance ratings, and order intake momentum. As part of Serco, it will be better placed to deliver sustainable growth with greater scale, lower overheads, and broader customer reach.
“Following completion, our North American revenue will approach $2.5bn, significantly strengthening our position in the world’s largest defence market. We look forward to welcoming our new colleagues to Serco and building on our proven track record of successfully integrating acquisitions to create long-term value.”
Compelling strategic rationale
- Continued strategic execution in attractive US defence market: The acquisition will expand Serco’s scale in North America by over 15% to approximately $2.5bn, with defence accounting for over 45%² of the Group. This is aligned with Serco’s strategy of focusing on our highest-priority markets and sectors, which benefit from structural growth drivers. The acquisition follows a strong period for the sector across the Group, with defence delivering 10% organic growth in the first half of 2026.
- Expands Serco’s in-demand defence capabilities including in growing space defence domains: QQUS provides technical and programme management, systems engineering, and acquisition support for the development of the United States Space Force’s Proliferated Warfighter Space Architecture programme. QQUS strengthens Serco’s technology positioning, particularly in relation to advanced sensor and persistent surveillance markets, and introduces new capabilities in design, development, and production.
- Improves competitiveness and supports organic growth: QQUS will benefit from Serco’s scale in North America and lower overheads, making it better placed to compete for existing and new work. The expanded capabilities and customer relationships the transaction brings will also provide Serco with access to a broader pipeline of opportunities.
The acquisition does not change our 2026 guidance, as set out at our half-year results on 6 August 2026. The next trading update is scheduled for 10 December 2026.
Conference call
Anthony Kirby (Group Chief Executive), Mark Reid (Group CFO), and Barbara Supplee (CEO North America) will conduct a conference call and presentation for analysts and institutional investors at 09:30 UK time on 12 November.
The call will be webcast live at https://www.lsegissuerservices.com/spark-insights/SercoGroup/events/6c003f3b-4972-46d1-9e49-dd9953486bc5 and will subsequently be available on demand.
To be able to ask questions, please use the dial-in facility which can be accessed on https://registrations.events/direct/LON40906VIPGRXeTwk2BqxFbB.
RBC Capital Markets acted as financial adviser to Serco in relation to the transaction.
Notes
¹ Multiple based on $237m consideration for the operating business, and using Serco’s estimated 2027 pro forma underlying operating profit of $21m for QQUS, plus $3m run-rate synergies.
² Revenue mix including Serco’s share of joint ventures
Currency exchange rate: For the conversion into pounds, we use a GBP:USD rate of 1.34.
This announcement contains inside information for the purpose of the UK Market Abuse Regulation. The person responsible for arranging the release of this announcement on behalf of Serco Group plc is Amanda Miller, Group General Counsel and Company Secretary.
Ends.
For further information, please contact:
Jamie Hastings, Head of Investor Relations | +44 (0) 7718 195 074 | jamie.hastings@serco.com
Sophie McMillan, Director of Media Relations | +44 (0) 7356 157 071 | sophie.mcmillan@serco.com
About Serco
Serco brings together the right people, the right technology and the right partners to create innovative solutions that make a positive impact and address some of the most urgent and complex challenges facing the modern world.
With a primary focus on serving governments globally, Serco’s services are powered by more than 50,000 people working across defence, space, migration, justice, healthcare, mobility and customer services.
Serco’s core capabilities include service design and advisory, resourcing, complex programme management, systems integration, case management, engineering, and asset & facilities management.
Underpinned by Serco’s unique operating model, Serco drives innovation and supports customers from service discovery through to delivery.
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”, “believe”, “estimate”, “may”, “could”, “should”, “will”, “continue”, “aspire”, “aim”, “plan”, “target”, “goal”, “ambition”, “intend” or, in each case, their negative or other variations or comparable terminology 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 may differ materially from those currently anticipated 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 nature of any enforcement action or 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 or behaviour and other changes to business conditions; wars and acts of terrorism; cyber-attacks; climate change and related regulatory developments; and pandemics, epidemics or natural disasters. Many of these factors are beyond Serco’s control or influence. Forward-looking statements are not guarantees of future performance. These forward-looking statements are based on information available, and assumptions made, 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 (including under the UK Listing Rules and the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority), Serco expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement (including 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. Accordingly, undue reliance should not be placed on the forward-looking statements.
LEI: 549300PT2CIHYN5GWJ21
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