EL SEGUNDO, CA, Feb. 12 /PRNewswire-FirstCall/ -- COM DEV USA, LLC, a subsidiary of COM DEV International Ltd. (TSX: CDV), today announced that it has reached an agreement with L-3 Communications to acquire the Passive Microwave Devices product line of L-3 Communications Electron Technologies Inc. (referred to in this news release as "ETI-PMD") for $12.2 million. (All figures are expressed in US dollars.) The ETI-PMD group has a 35 year history as a key supplier to the US space market and has a contract backlog which includes a number of legacy contracts on major ongoing US government and commercial satellite programs. ETI-PMD's 65 employees and its assets and equipment will be transferred from their existing location in Torrance, CA to COM DEV's recently purchased production facility in El Segundo, CA, approximately 10 miles away.
"The acquisition of a business with an established revenue stream accelerates our entry into the US Government space market, and vaults COM DEV into a leadership position among US suppliers of passive microwave equipment for space," said John Keating, CEO of COM DEV International. "We think this business is a great fit with our core capabilities and strategic objectives, and we plan to grow it aggressively. I'd like to extend a warm welcome to the team of highly skilled and experienced employees who will be joining our Company."
Originally a unit of Hughes Electronics Corp, ETI was purchased by Boeing as part of a larger transaction in 2000, and subsequently sold to L-3 Communications in early 2005. The Passive Microwave Devices product line has over 35 years of experience on more than 100 US satellite programs designing and producing space qualified passive microwave components including multiplexers, filters, switches and ancillary components. COM DEV will be acquiring significant intellectual property resources developed over that 35-year history, including over 100 patents.
"We are very pleased to strengthen COM DEV USA by adding a team with more than 1000 combined person-years of experience, as well as a significant body of intellectual property dating back to the time this business was part of Hughes," said Dan White, President of COM DEV USA. "We believe this transaction creates a passive microwave subsystem powerhouse that will become an integral supplier to the US Government prime contractors."
COM DEV plans to finance the ETI-PMD purchase through existing cash resources and borrowing facilities. As a result of assets acquired in the transaction, the Company expects to forego $5.5 million of capital expenditures previously estimated to be required to fund the build-out of its California operation. Management anticipates that COM DEV USA will be profitable in the Company's current fiscal year ending October 31, 2008.
The ETI-PMD transaction, which is subject to regulatory approval, is expected to close within the next three months. The final purchase price will be subject to certain closing adjustments.
About COM DEV
COM DEV International Ltd. (http://www.comdevintl.com/) is a leading global designer and manufacturer of space hardware subsystems. With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced products and subsystems that are sold to major satellite prime contractors for use in communications, space science, remote sensing and military satellites.
COM DEV and COM DEV USA are registered trademarks of COM DEV International Ltd. This news release may contain certain forward-looking statements that involve risks and uncertainties. Actual results may differ materially from results indicated in any forward-looking statements. The Company cautions that, among other things, in view of the rapid changes in communications markets and technologies, and other risks including the cost and market acceptance of the Company's new products, the level of individual customer procurements and competitive product offerings and pricing, and general economic circumstances, the Company's business prospects may be materially different from forward-looking statements made by the Company.
