CACI International [CACI] last Wednesday said it is acquiring two companies that will strengthen its products and capabilities in the areas of signals intelligence (SIGINT), electronic warfare (EW), and cyber in deals totaling a combined $975 million.
CACI has agreed to acquire LGS innovations for $750 million from the private equity firms Madison Dearborn Partners and CoVant Management. Northern Virginia-based LGS provides real-time spectrum management, C4ISR, and cyber security products and solutions to the intelligence community and Defense Department.
LGS also develops and manufactures custom lasers for remote-sensing systems and its technical components are used on both manned and unmanned aircraft to continuously monitor and track broadcast signals, imagery, and the presence of chemical and biological material.
Separately, in a $225 million deal CACI acquired New York-based Mastodon Design, which does rapid design and manufacturing of SIGINT, EW and cyber operations products and solutions that are lightweight , feature small form factors, and require less power, Ken Asbury, CACI’s president and CEO, said during the company’s second quarter earnings call last Wednesday evening.
CACI said the acquisitions will add about $480 million in sales and $82 million to operating earnings in the next year. The LGS deal is expected to close in early March.
CACI also said that the acquisitions fit with changing trends among national security customers who want to buy and field capabilities quickly and also rapidly be able to update these capabilities through applications in the field with no downtime to meet evolving threats.
“The synergies in our offerings will strengthen our competitive position while bringing agile innovation to our customers’ missions,” Asbury said in a statement. During the earnings call, he said all three companies will be able to integrate each other’s technologies in their respective products.
“Our unified software-defined, open architecture offerings will be highly differentiated within the market and putting these companies together strengthens the security of our software and hardware supply chain,” Asbury said.
LGS has 1,320 employees and Mastodon around 50. Tax benefits from the deals are expected to lower the enterprise value of the transactions by $140 million.
CACI said that it expects to incur $13 million in after-tax transaction expenses.
For the quarter, sales rose nearly 9 percent to $1.2 billion with just over 2 percent of the growth organic. Net income fell 52 percent to $68.6 million, $2.71 earnings per share, due to higher taxes. At the operating level, before taxes, income increased 16 percent to $102.3 million.
CACI’s financial adviser on the deal for LGS is J.P. Morgan Securities.