Mercury Systems Inc. announced that it has signed a definitive agreement with Microsemi Corp. to acquire the embedded security, RF and Microwave, and custom microelectronics businesses of Microsemi. For the 12 months ended September 27, 2015, these businesses had combined revenues of approximately $100 million and pro forma stand-alone adjusted EBITDA of approximately $28 million. The businesses are primarily focused on the defense electronics market and employ a total of approximately 275 people based at facilities in Phoenix, Ariz., Camarillo, Calif., San Jose, Calif., and West Lafayette, Ind.
Pursuant to the terms of the agreement, Mercury will acquire these businesses for a total purchase price of $300 million. The acquisition and associated transaction expenses are expected to be funded with a combination of committed financing for a new $265 million bank term loan A and approximately $50 million of Mercury’s cash on hand. In addition to the term loan, the financing also includes a new $75 million revolving credit facility which is not expected to be drawn at closing. The transaction is expected to be highly accretive to fiscal 2017 adjusted EPS and adjusted EBITDA margin.
“The single transaction we’re announcing today covers all three major parts of our business and, in effect, positions Mercury as the defense industry’s largest commercial embedded secure processing company,” said Mark Aslett, President & CEO of Mercury. “The transaction adds secure solid-state storage to our array of industry-leading, pre-integrated processing subsystems capabilities. It nearly doubles the size of our RF and Microwave business, adding new capabilities, scale and synergies. In addition, it provides us with new capabilities in embedded security and mixed signal system-on-chip processing. All these capabilities are highly aligned with our business from a strategic perspective, so there couldn’t be a better fit with our existing strategy and solutions portfolio.”
“I'm excited about the abilities of these Microsemi businesses to bring new capabilities to Mercury's impressive mix of pre-integrated subsystems in support of numerous defense programs and platforms,” said Charlie Leader, Microsemi’s executive vice president and general manager. “There is an excellent fit strategically, culturally and operationally between the businesses to be acquired and Mercury.” Mr. Leader and his team will be joining Mercury as part of the transaction.
The acquisition is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is currently expected to close during Mercury's fiscal 2016 fourth quarter ending June 30, 2016.
Visit https://www.mrcy.com/acquisition/ for more information.