Mercury Systems, Inc. [MRCY] announced on Monday that it has acquired Delta Microwave, LLC for $40.5 million in cash.
The acquisition, subject to net working capital and net debt adjustments, is expected to be treated as an asset sale for tax purposes, Mercury said.
Delta is a designer and manufacturer of high-value radio frequency (RF), microwave, and millimeter wave subassemblies and components for military and space markets. For the fiscal year ending Dec. 31, 2016 Delta had revenues of about $12.8 million and is on a growth trajectory with a backlog on funded orders, Mercury said.
Mercury Systems is a commercial provider of secure sensor and mission processing subsystems for critical defense and intelligence programs.
Mercury maintained the transaction presents opportunities for cost synergies as well as tax benefits associated with the transaction structure.
“The acquisition of Delta Microwave is an excellent fit for our market and content expansion strategy. Their strengths in high-power, high-frequency active and passive microwave components and subassemblies – particularly in GaN solid-state power amplifiers – are driving strong backlog and growth,” Mark Aslett, Mercury president and CEO, said in a statement.
“These new capabilities add scale and breadth to Mercury’s existing RF, microwave and millimeter wave portfolio, expand our addressable market into satellite communications, datalinks and space launch – markets that are well-aligned with Mercury’s existing market focus – and deepen our penetration into our core radar, electronic warfare, and precision-guided munitions markets,” he added.
Aslett also said Delta has a “strong” position on U.S. and international defense programs including the F-35, Paveway, MALD, and River Joint that complement Mercury. He also noted Delta can help Mercury grow through its relationships with space original equipment manufacturers by supplying future manned spaceflight missions in addition to military and commercial satellite programs.
“The acquisition of Delta doesn’t just provide important new capabilities for our customers; it also enables us to grow the size of our total addressable market. We are very pleased to welcome the Delta team to Mercury,” Aslett said.