By Calvin Biesecker
Britain’s Chemring Group PLC last week said it has conditionally agreed to acquire the North Carolina-based Chemical, Biological and Explosives (CBE) operation from General Dynamics‘ [GD] Armament and Technical Products subsidiary for $90 million in cash.
The CBE business had $61.5 million in sales last year and pre-tax profits of $8.3 million, versus sales of $69.8 million and pre-tax profits of $8.3 million in 2009. The business also had $62 million in orders as of March 31. The acquisition, which is subject to regulatory approvals in the United States, is expected to close within 60 days.
The GD operation is a prime contractor on two important United States military vehicle-mounted detection programs, the Joint Biological Point Detection System (JBPDS) and the Joint Service Lightweight Standoff Chemical Agent Detector (JSLSCAD). GD has sold 750 of the JBPDS systems to the Army, with its most recent award for $30 million last September to begin a new round of production. That contract was an initial task order under a potential $300 million award.
JBPDS provides automatic detection and identification of airborne biological agents and triggers local and remote warning systems.
As for JSLSCAD, GD has delivered nearly 250 of the standoff chemical detectors since 2008. The system detects, classifies and identifies chemical agents.
The CBE operations also makes the Juno handheld chemical detector for first responders and is a subcontractor to a small Pennsylvania firm called ChemImage Corp. that is developing a standoff detection capability for homemade explosives in support of deployed U.S. forces.
Chemring, which doesn’t identify ChemImage in its announcement, says that the standoff improvised explosive detection system developed in partnership with GD’s CBE operation “provide a complementary forward-look capability to NIITEK’s Husky Mounted Detection System ground penetrating radar, which when used in combination, has the potential to transform the speed of route-clearance operations in theater. In addition, Detection Systems (Chemring’s name for the CBE operation) is already under contract with its partner to develop and deliver a number of stand-off explosives detection systems.”
Indeed, last December the Army announced that it had awarded ChemImage a $17.2 million contract to build and deliver five LightGuard Systems plus to additional sensors and a recommended concept of operations and support an in-theater early user test with work to be completed by Dec. 2011.
NIITEK, which is based in Virginia, was acquired by Chemring in December 2008 (Defense Daily, Oct. 10, 2008).
The pending deal for GD’s CBE operation marks a further expansion by Chemring into the U.S. defense market. Last year the British company acquired The Allied Defense Group (ADG), which has operations in the United States and Belgium, and in 2009 it purchased energetic solutions company Hi-Shear Technology (Defense Daily, Sept. 17, 2009 and Jan. 20, 2010). Also in 2008 Chemring acquired a battlefield effects simulator business from ADG and in 2006 bought another U.S.-based energetic business, Technical Ordnance, Inc.
In the area of IEDs and unexploded ordnance, Chemring also has capabilities in neutralization and has a storage and demilitarization facility in Italy to dispose of expired or redundant munitions.
Chemring also said it sees potential to distribute the Juno hand-held chemical detector through its international sales and distribution network.
Stone Key Partners served as GD’s financial adviser on the deal.