Mercury In Agreement To Acquire Themis

A week after disclosing it was in discussions to acquire Themis Computer, Mercury Systems [MRCY] on Thursday said it has agreed to acquire the Silicon Valley-based provider of rugged computing solutions in a $180 million cash deal that builds on the company’s recent entry into the C4I market.

The price for Themis is $5 million higher than Mercury said a week ago. The deal is expected to close during the first quarter of 2018 subject to regulatory approvals.

“The acquisition of Themis is consistent with our strategy and will expand our position in the growing command, control, communications, computers and intelligence market, Mark Aslett, president and CEO of Mercury, said in a statement. “We view Themis as a platform for accelerating our growth organically and through future acquisitions.”

Mark Aslett, president and CEO of Mercury Systems. Photo: Mercury Systems

Mark Aslett, president and CEO of Mercury Systems. Photo: Mercury Systems

Themis develops a range of servers, hyper-converged computer systems, small form factor tactical systems and computers, switches, and storage systems for defense, aerospace, energy and commercial applications. Mercury provides sensor and mission processing subsystems to the defense industry.

Themis is expected to generate $57 million in sales this year with adjusted operating margins of about 23 percent. Mercury said the acquisition will immediately be accretive to per share earnings and will result in about $1 million in annual cost saving synergies.

Mercury also expects the acquisition to provide revenue synergies, noting that Themis is aligned with its existing business

In addition to strengthening Mercury’s position in the C4I space, the company said the pending deal also enhances its ability to offer tactical cloud solutions and rugged computing solutions, and boosts its footprint on Army and Navy programs. Mercury said Themis’ products are used on just about every Navy surface ship and submarine.

“With a large installed base and designed-in as a sole-source provider of rugged, rack-mounted servers for some of the largest Navy and Army server programs in the U.S. Department of Defense, Themis complements Mercury’s presence in those areas,” Aslett said.

Key customers of Themis include Science Applications International Corp. [SAIC], General Dynamics [GD], Lockheed Martin [LMT], Oshkosh Corp.’s [OSK] defense truck business, France’s Thales, Leonardo DRS, the U.S.-based division of Italy’s Leonardo, and the U.S. Navy.

In addition to its California headquarters, Themis has locations in Northern Virginia and France.

Mercury isn’t using a financial adviser on the deal. Themis is being advised by KippsDesanto.

Mercury expects to have sales of between $457 million and $468 million in its fiscal year 2018 that ends next June, excluding results from Themis.

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