Kratos Defense & Security Solutions [KTOS] on Tuesday said it has acquired the Engineering Division of Southern Research

for $80 million, adding a new research and development campus and capabilities in developing, modeling and deploying advanced materials for extreme environments.

Kratos said that 25 percent of the purchase price is going toward a 54-acre campus in Birmingham, Ala., that includes 102,000 square feet of laboratory, material assessment, technology, prototype development, and other facilities. The campus also includes the machinery and equipment for the test, evaluation, analysis and extreme environment characterization of materials for hypersonic, missile defense, strategic deterrent, space-related and other systems.

The acquisition strengthens Kratos’ existing capabilities in hypersonic and missile system work. Southern Research Engineering helps the government and defense contractors characterize and select strategic materials for certain applications and the company also contracts with the space community for launch, re-entry, and other systems.

Kratos said the purchase price is subject to reduction based on working capital and includes $75 million in cash and $5 million in stock.

The rest of the purchase price represents about 1.6 times Southern Research Engineering’s historical, 12-month trailing revenue, and includes about $15 million in annual intelligence, surveillance and reconnaissance (ISR) and other unique product development initiatives in development and expected to transition to production.

Southern Research Engineering has about 140 engineers, technicians and program support professionals, most of whom have national security clearances.

In addition to its materials work, the Kratos’ new engineering unit also specializes in ISR sensor development, electromechanical systems design and integration, aerospace engineering, materials engineering, artificial intelligence and machine learning, directed energy, radio frequency systems design and integration, advanced manufacturing and computational sciences.

For the Southern Research Engineering unit, Kratos gives it a platform to increase its total addressable market and take its capabilities in materials work through “flight testing and beyond,” Michael Johns, the former vice president of engineering at the engineering unit and now SRE senior vice president at Kratos, said in a statement.

The new Kratos SRE business unit is part of Kratos’ Defense and Rocket Support Services Division.

Dave Carter, president of the Defense and Rocket Support Services Division, said in a statement that “we will be working to expand Kratos SRE’s testing and technology maturation offerings to include live fire tests using Kratos’ family of proven subscale launch vehicles.”

Kratos expects the SRE business to begin achieving organic growth in 2023 and beyond.

Southern Research’ financial advisor on the deal was DC Advisory.