Cubic Corp. [CUB] on Monday said it has acquired one firm and agreed to acquire another in deals aimed at further expansion in the C4ISR arena.
Cubic said it paid $39 million for Teralogics, LLC, which provides real-time, full-motion video processing, exploitation and dissemination for customers in the Defense Department, intelligence community, and commercial space. The Teralogics deal includes a potential $9 million additional payment depending on how well the new business unit performs.
Cubic will pay $232.5 million for GATR Technologies, Inc., which makes deployable satellite communication terminals, including inflatable antenna systems that weigh less than 200 pounds and can be set up and connected to a satellite in 30 minutes. The GATR deal price includes another $7.5 million in potential earn-out provisions.
The GATR acquisition is expected to close in the first quarter of 2016 pending regulatory approval. Cubic will host a call with investors on Jan. 8 to discuss the acquisitions and the related financial impacts to the company.
The two deals build on and complement Cubic’s acquisition a year ago of DTECH LABS, a provider of ruggedized tactical and strategic modular networking and baseband communications equipment that marked the company’s first step into building out a niche C4ISR business. Cubic’s legacy business in C4ISR is in data links and specialized encrypted communications.
Cubic said the acquisition of Teralogics, which is based in Northern Virginia, complements its tactical communications portfolio and establishes it as a “key player” in the ISR full motion video market. Teralogics’ key product is a subscription-based cloud solution for full-motion video and its primary customer is the Defense Information Services Agency through the Unified Video Dissemination System contract, Jay Thomas, Cubic’s chief financial officers, told Defense Daily in a telephone interview.
Cubic also said that its international presence will help it bring Teralogics’ products to a larger market.
GATR, based in Alabama, has key customers in the Army, Marine Corps and Special Operations Command for its inflatable antenna systems, Thomas said. The company’s key contracts are a Small Business Innovation Research Phase III award and the Army’s Transportable Tactical Command Communications (T2C2) program of record supporting the WIN-T program, he said. On Dec. 11 GATR received its first low-rate initial production order under T2C2 for $3.2 million and this summer the company received a potential $11 million contract from the Marines for the inflatable satellite terminals.
Thomas said GATR’s inflatable antenna technology, which is used by expeditionary forces, represents an “inflection point” for the company’s growth. He said the relatively lightweight, portable antennas represent next-generation technology that will replace two-ton antennas.
Cubic had $1.4 billion in sales in its latest fiscal year that ended in September, with 60 percent of its revenue from its defense segments. Cubic’s key defense businesses are in training and simulation, range design, and C4ISR. The company’s other major business is in systems supporting transportation.
When Cubic announced the DTECH acquisition last December, it said the deal was the first step toward building a $100 million to $200 million C4ISR business in the near-term. With the Teralogics and soon-to-be closed GATR acquisition, Thomas said that Cubic will have achieved this near-term goal and will discuss on the Jan. 8 call its way forward in that space.
The acquisitions enable Cubic to “move up the food chain” in terms of being able to supply systems-level capabilities with a complete suite of solutions and “enable us to go after larger pieces of major programs,” Thomas said.
Cubic said the acquisitions are expected to increase earnings in fiscal year 2017, which begins on Oct. 1, 2016.