By Calvin Biesecker
Stanley, Inc. [SXE] yesterday said it has agreed to acquire Oberon Associates for $170 million in cash, its largest acquisition to date, giving it new customers in the Defense Department and intelligence community and new capabilities in system engineering, intelligence community support and information technology.
Oberon, which is based in Northern Virginia, is expected to have $80 million in sales in its fiscal year that ends June 30. Stanley expects Oberon to achieve at least 10 to 15 percent organic growth annually and be accretive to earnings in its current fiscal year, which ends next March. The transaction is expected to close by Sept. 30, 2008.
Oberon’s key customers include the Army Intelligence Center at Fort Huachuca, Ariz., the Air Force Electronic Systems Center, Defense Information Systems Agency (DISA), the Transportation Security Administration, and several agencies within the intelligence community. Earlier this month Oberon was awarded a prime contract on DISA’s potential 10-year, $12.2 billion ENCORE II contract, allowing it to compete for various task orders.
Oberon, which does about 80 percent of its business as a subcontractor, is a Tier One supplier to Raytheon [RTN] on the company $10.2 billion Warfighter Focus contract with the Army. Oberon also supports Jacobs Engineering on the Air Force Engineering and Technology Acquisition Support Services Contract. Another key contract area, which is providing about $28 million in annual sales, is the company’s support both as a subcontractor and occasional prime under the military’s Biometric Automated Toolset program.
Oberon’s key capabilities are in biometrics systems engineering, integration and operational deployment, intelligence community support, communications engineering, and information technology and enterprise data management.
For Stanley, which has little in the way of intelligence business now, the deal will mean about 10 percent of its sales will be related to intelligence.
Most of Oberon’s contracts are in the early stages so they have long run times, Phil Nolan, Stanley’s chairman, president and CEO, said on a conference call with analysts yesterday. The company has no major contract recompetes or reissuances in the near-term, he said. He also said there is no overlap between the two companies.
“This transaction is consistent with Stanley’s growth strategy that calls for the development of new customers, contract vehicles and service offerings via mergers and acquisitions,” Phil Nolan, Stanley’s chairman, president and CEO, said in a statement. “In addition, it reinforces Stanley’s strategy of expanding our presence in key markets positively impacted by the Base Realignment and Closure process.”
Oberon has over 600 employees. KippsDeSanto & Co. is Oberon’s financial advisor on the deal.