Serco, Inc. on Thursday said it has agreed to acquire the Naval support business of Alion Science and Technology for $225 million, a deal that will significantly add to its defense business, particularly for the Navy.

The deal, which is expected to close in the second half of 2019 pending regulatory approvals, also includes Alion’s Canadian business and some smaller contract operations.

Alion’s naval support business provides comprehensive technical expertise for ship design and operations. Photo: Alion

Alion’s Naval Systems Business Unit (NSBU) had $336 million in sales and Serco’s defense business $453 million, raising total defense revenue to $789 million.

“Combining our existing C5ISR capabilities in ship, shore, satellite and radar modernization with the naval design and engineering capabilities of NSBU will make Serco a top-tier Navy services provider with a full-spectrum, design-integrate-support life-cycle maritime offering,” Dave Dacquino, chairman and CEO of Serco, Inc., said in a statement. “This is a growth-oriented strategic acquisition that brings Serco highly valued technical talent and we look forward to the new opportunities this transaction will create across both organizations.”

Serco, Inc. is the U.S. based business of Britain’s Serco Group plc. The company’s defense business has 2,300 employees.

Alion said it is divesting the NSBU business so that it can focus on its core capability areas in C5ISR systems and solutions, artificial intelligence, cyber solutions, electronic warfare technology, and live virtual constructive training systems.

The NSBU unit will operate as a new business of Serco and retain its existing management team and staff. The unit provides shipboard, shore and systems installation and upgrade services to the Navy. It also performs naval ship and submarine design and engineering services, production support and in-service sustainment. The business has 1,000 employees and is led by Vince Stammetti.

The pending acquisition also increases Serco’s business with Canada and adds a new customer, the Royal Canadian Navy, and a new location, Vancouver Shipyards. The NSBU’s other customers include Naval Seas Systems Command, the Office of Naval Research, the U.S. Coast Guard, the Army, and some international navies. The unit also supports unmanned surface and unmanned underwater vehicles.

Stammetti said that as part of Serco he believes NSBU will be able to pursue larger opportunities.

Serco’s financial adviser on the deal is Rothschild & Co.