The United Kingdom’s Digital Barriers plc on Friday said it has agreed to acquire Virginia-based intelligence, surveillance and reconnaissance firm Brimtek for $25 million in cash in a deal that strengthens its presence in the United States defense and security market.
The deal also includes a $20 million earn out provision payable in cash or a combination of cash and new shares issues by Digital Barriers, which is publicly traded in the United Kingdom.
Brimtek provides tactical surveillance capabilities ranging from audio surveillance devices such as transmitters and receivers, and communications intercept, to micro and long-range video surveillance cameras and satellite intercept devices. The company also provides customs solutions for user needs, training and ISR consulting services.
Digital Barriers said it has been successful in selling its surveillance technologies to “flagship” customers in the U.S. government “but requires a more substantial U.S. presence in order to consolidate its current position and drive more material future revenue growth.” The company said that Brimtek is attractive “given its breadth of offerings to the U.S. defense, national security and law enforcement communities, which present significant sales synergies with Digital Barriers in the U.S. market.”
Digital Barriers pointed out that the United States is “the single largest market for defense and homeland security technologies, with a significant concentration of flagship customers driving innovation in surveillance and security technology.”
Moreover, Digital Barriers also said that the U.S. Federal Communications Commission’s auction this year of cellular spectrum “is expected to drive material investment in surveillance technology and infrastructure over the coming three to four years.”
Digital Barriers provides sensors and cameras for force protection and tactical surveillance, vehicle-based surveillance kits, airborne surveillance kits, integrated surveillance platforms for netting multiple sensors, and surveillance solutions for law enforcement, border security, and the oil and gas market.
Brimtek had $8.2 million in sales in 2014 and $200,000 in earnings before interest, taxes, depreciation and amortization (EBITDA). In the first nine months of 2015, Brimtek posted $19.6 million in sales and $1.9 million of EBITDA, and sales for all of this year are projected to be about $40 million with EBITDA about $3.5 million. The company has 13 full-time employees and 10 contractors.
The full $20 million earn out provision is continent upon Brimtek doubling its sales in 2016 over 2015 expectations.
Digital Barriers sales in the first half of its fiscal year were $12 million.
The deal is expected to close in February 2016 contingent upon regulatory approval.
The McLean Group is serving as Brimtek’s financial adviser on the deal.