Serco has announced on 23 May that it will acquire the Naval Systems Business Unit (NSBU) of Alion Science and Technology Corporation in a deal valued at USD225 million.
The acquisition will be on a cash-free, debt-free basis. Serco will finance the acquisition through a combination of a new committed debt facility of up to GBP75 million (USD95 million) and an equity placement of up to 111,216,400 new shares to generate a further GBP130 million. The placement represents up to 10% of Serco’s existing share capital.
Alion’s NSBU is an engineering and support business that supports the design, build, and through-life support of naval and amphibious support ships and submarines. Areas of work include hull and system design and integration, and modernisation and upgrade engineering. The business is also working on unmanned surface vehicles and unmanned underwater vehicles.
Clients include the US Army, US Navy (USN), US Coast Guard, and Royal Canadian Navy (RCN). The company’s work for the USN has involved design work for the DDG-1000 Zumwalt-class destroyers; in-service support work for the US Surface Warfare Directorate on non-nuclear and non-littoral combat ship (LCS) vessels; engineering and life-cycle support of USN submarines; and design, testing, support, and maintenance of the Arleigh Burke-class destroyers. Work for the RCN includes design, development, and systems integration support for the Joint Support Ships.
According to Serco, Alion’s NSBU delivered revenues of USD336 million in the 12 months prior to September 2018, compared with Serco’s North American defence revenues in 2018, which were valued at USD453. NSBU has an orderbook of USD600 million and an order pipeline of USD2 billion. Serco has projected that the company will generate revenues of USD370 million and underlying profits of USD27 million in the first full year of ownership.
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