Britain’s Cobham plc on Tuesday said it has agreed to acquire the radio frequency and microwave components and subsystems business of M/A-COM from Tyco Electronics [TEL] for $425 million in cash as it continues to build out its portfolio in the aerospace and defense space.
The acquisition is part of Cobham’s strategic plan to become a global Tier 2 supplier of integrated radio frequency front ends for radars and electronic warfare systems, the company said.
Cobham, which has made 10 acquisitions in the United States of defense electronics firms, plans to keep the aerospace and defense business of M/A-COM and sell the commercial side of the company. Just less than 40 percent of M/A-COM’s sales this year are expected to be in aerospace and defense.
M/A-COM had operating profits of $37.9 million on sales of $477.7 million for the year ended Sept. 30, 2007. The aerospace and defense component has 1,000 employees, including 160 engineers.
M/A-COM’s aerospace and defense business is an original equipment manufacturer of microwave subsystems and components used in a variety of platforms such as the F-35 Joint Strike Fighter, the P-8 Multimission Maritime Aircraft, tactical missiles and integrated defense electronic countermeasures.
Cobham said that M/A-COM’s products are complementary to its existing Cobham Defence Electronic Systems (CDES) division, adding additional microwave technical expertise, new products and customers. Cobham said that there will be opportunities for collaboration between existing CDES business units, particularly REMEC, which is also based in the United States, on business and product development.
Cobham intends that M/A-COM’s active microwave activity at locations in California and Massachusetts will be managed long with REMEC and the company’s microelectronics segment in Lansdale, Pa., as a single unit. M/A-COM’s signals intelligence and antenna capabilities will be managed through Cobham’s Sensor and Antenna Systems business based in Lansdale.
Cobham said it will accelerate the internal research and development investment in M/A-COM.
The CDES, including M/A-COM’s aerospace and defense revenues, is expected to have sales of about $850 million. Currently 47 percent of Cobham’s $2.1 billion in annual revenues come from North America.
The acquisition is expected to close in the second half of this year. The new aerospace and defense business will operate under an existing Special Security Agreement with the Defense Department.
Regarding the sale of the commercial portion of M/A-COM, Cobham believes this should happen quickly based on the high level of interest during Tyco’s auction.
UBS Securities acted as Cobham’s financial adviser on the deal.