SES S.A. on Tuesday said it has agreed to acquire the U.S. government satellite communications business of Leonard DRS for $450 million in a deal that will double the size of the Luxembourg-based company’s business with the federal government.

The acquisition is expected to close in the second half of 2022 pending regulatory approvals.

The DRS Global Enterprise Solutions (GES) business is expected to generate more than $250 million in sales. SES said deal will complement its multi-orbit satellite networking capabilities with GES’s capabilities in satellite communications integration.

SES has 70 satellites in orbit, which are leveraged by its Government Solutions (SES GS) business to provide satellite communications services to the U.S. Defense Department, combatant commands and military services. GES will become part of SES GS.

“This investment reinforces our commitment to provide industry-leading solutions and services for government customers while delivering sustained growth for SES in a high-value segment in which we have a track record of partnership and success,” Steve Collar, SES’s CEO, said in a statement. “I have long admired GES and its culture of long-standing relationships build on the delivery of high-performance, reliable, and mission critical connectivity solutions across the U.S. government. “They are a best-in-class solutions provider and the combination with our own SES Government Solutions business will allow SES to service the U.S. government with an expanded and enhanced set of advanced connectivity and network solutions leveraging the world’s largest multi-orbit satellite fleet.”

Some of GES’s main customers include U.S. Special Operations Command, U.S. Africa Command, Alaska, and other U.S. agencies.

Leonardo DRS, a U.S. based operation of Italy’s Leonardo, said it is divesting GES to focus on its core capabilities. The company said the sale will allow it to consider larger potential acquisitions to improve these capabilities and open new markets.

Leonardo DRS’s focus for investments include growing organic technology capabilities and opportunities to focus on DoD priorities in sensing, electronic warfare and cyber, network computing, communications, force protection, and electrical power conversion and propulsion, a company spokesman told Defense Daily


SES said the acquisition will add about $40 million in operating earnings and result in $25 million in annual cost saving synergies. It also said the deal is expected to be immediately accretive to earnings and free cash flow.

Leonardo DRS’s financial adviser on the deal is Morgan Stanley.