L-3 Communications [LLL] on Tuesday said it has acquired United Kingdom-based MacDonald Humfrey for $280 million in cash, bolstering the company’s aviation security business by adding system integration capabilities around automated checkpoint solutions.
The purchase price has a potential earn-out provision of $37.5 million if MacDonald Humfrey meets certain performance targets in 2017, 2018 and 2019.
MacDonald Humfrey has deployed its solutions at airports in Europe, the Middle East and Canada and is engaging with airports and airlines in the United States to reduce checkpoint delays and develop passenger and baggage tracking systems to facilitate efficient security throughout airports.
L-3 said MacDonald Humfrey is expected to generate $135 million in sales in 2017. The company also said the purchase price represents a multiple about 10 times MacDonald Humfrey’s estimated 2017 earnings before interest, taxes and depreciation and amortization.
“L-3 has been very focused on developing total aviation checkpoint solutions built around our innovative ClearScan carry-on baggage screening system and our ProVision personnel screener,” Michael Strianese, L-3’s chairman and CEO, said in a statement. “The acquisition of MacDonald Humfrey, with its market-leading checkpoint management systems and security efficiency software, will enhance our ability to deliver scalable, operationally-based networked security systems. L-3 MacDonald Humfrey enhances our position in the global aviation security market while at the same time creating new opportunities for that business as it leverages existing worldwide distribution channels.”
MacDonald Humfrey is part of L-3’s Security Detection and Systems business.