WASHINGTON (dpa-AFX) - Kratos Defense & Security Solutions, Inc. (KTOS) said Tuesday that it has agreed to buy privately held drone maker Composite Engineering, Inc. for $155 million in cash and stock.
Composite Engineering manufactures aerial target drone systems and composite structures. The company provides a suite of aerial target drone systems to U.S. Department of Defense agencies and international defense programs.
In calendar 2011, Composite Engineering generated revenue of $94 million and Adjusted EBITDA of about $16 million, generating an annual organic growth rate in excess of 25 percent over 2010.
Kratos will pay $135 million in cash and $20 million in stock to acquire 100% of the stock of Composite Engineering. Additionally, the deal is expected to be structured as a 338(h) (10) for income tax purposes, which will result in Kratos receiving about $130 million in federal and California state income tax deductions over a 15-year period.
Eric DeMarco, Kratos' President and CEO, said, 'CEI is clearly a world leader in the design, engineering, development, manufacturing and production of leading edge unmanned aerial targets and airframe structures. Similar to the Kratos Aegis Readiness Assessment Vehicles, or ARAVs, certain of CEI's products are also designed to replicate some of the most advanced aerial threats and potential adversary fighter aircraft in the world today, including next generation threats. Additionally, certain CEI products and aerial systems support leading edge electronic warfare programs, another area where Kratos is particularly well positioned.'
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