Britain’s Ultra Electronics Holdings plc said on Wednesday that has acquired 3 Phoenix Inc. (3Pi) for $70 million in cash, expanding its presence in the United States and in tactical and sonar systems.

Terms of the deal include up to $17 million in additional payments by Ultra based on 3Pi’s earnings growth during the next three years.

Sonar solution by 3 Phoenix, Inc.
Sonar solution by 3 Phoenix, Inc.

3Pi, which is based in Northern Virginia, is a supplier of specialist sonar, radar, intelligence, surveillance and reconnaissance products and processing systems, primarily to the Navy but also to commercial customers. The company says on its website that it is “focused on developing innovative technologies, primarily through Small Business Innovative Research and Small Business Technology Transfer opportunities, with the goal of transitioning products to our DoD and commercial customers.”

For Ultra, the deal offers access to new programs and offices within the Navy, particularly with sonar and torpedo weapon systems.

“3Pi provides important complementary technologies and products to advance Ultra’s strategy of targeting areas of preferential customer spending in the naval sensors, security and intelligence domains,” Rakesh Sharma, Ultra’s CEO, said in a statement. “3Pi is a technology-rich company with an established position in the U.S. market place. Its sonar, anti-submarine warfare, mine detection and electronic warfare capabilities have strong market-facing synergies with Ultra’s Avalon, Command & Control Maritime Systems, Ocean Systems, Sonar Systems and USSI businesses.”

Ultra’s operates through three divisions, Aircraft & Vehicle Systems, Information & Power Systems, and Tactical & Sonar Systems. annual sales are about $1.3 billion, with 48 percent of the business in North America and 30 percent in Britain. Europe accounts for 7 percent of revenues and the rest of the world the remainder. Ultra said the acquisition is expected to be fully accretive to its earnings in 2015.

For 3Pi, the deal strengthens access to international markets. 3Pi, which has 182 employees, will become part of Ultra’s Tactical & Sonar Systems Division.

Ultra acquired 3Pi from its management team, which will remain with the company.

3Pi’s financial adviser on the deal was The McLean Group.