The engineering and construction firm Parsons Corp. yesterday said it has agreed to acquire Sparta, Inc., for $350 million in cash from Britain’s Cobham, adding more capabilities in analytic services to intelligence and national security customers.
The pending acquisition would slightly more than double Parsons’ work providing systems engineering and professional services to the defense, security and intelligence communities, Todd Wager, a group president at Parsons, told Defense Daily yesterday.
Through June, Sparta had $144.3 million in sales and $13.8 million in operating profit. In 2010 Sparta had $322.7 million in sales. The company has 1,100 employees.
Parsons had $2.7 billion in sales last year.
Cobham had said in May that it was trying to find a buyer for Sparta, which it acquired in 2008 for $416 million, after the U.S. government changed is organizational conflict of interest rules (Defense Daily, May 11). At the time, Cobham said that the divestiture would allow it to put more focus and investment on its remaining strategic business units.
Most of Sparta’s work for the U.S. government is classified. The company provides scientific and engineering services to the missile defense and national security markets. Customers include the Defense and Homeland Security Departments and the intelligence community.
“By combining Sparta’s highly skilled and innovative workforce with Parsons, we are accelerating our strategy of broadening and deepening our services portfolio to our customers and strengthening cyber security offerings for potential new customers in key sectors such as critical infrastructure, manufacturing, healthcare and energy,” Chuck Harrington, chairman and CEO of Parsons, said in a statement.
Sparta’s Defense Business Unit is focuses on design, development, testing, fielding and sustainment of weapons systems, in particular missile defense, tactical systems, space systems and network-centric systems. Its National Security Business Unit has experts that help the intelligence and homeland security communities with intelligence production, information assurance and computer network operations.
For Parsons, Sparta provides capabilities in cyber security that will complement the company’s work with the intelligence community, Wager said. He also said that Sparta has systems engineering, and modeling and simulation capabilities that can be offered to Parsons’ existing customers. Parsons already offers customers in the Army, and to a lesser extent the Navy, live and virtual constructive training services.
Cobham said that the proceeds of the sale will be reinvested in its remaining core markets, which include aerospace and tactical communications, antenna, aviation and sensor systems, and life support and mission equipment. The company said it expects a $20 million gain from the sale.
While Cobham is selling Sparta for less than it acquired the firm, it says that the sale price combined with the cash and profit it has taken from Sparta exceed the original purchase price. UBS analyst Charles Armitage says in a note to clients that Cobham has gained about $100 million in cash and profit from Sparta since the 2008 acquisition.
The deal still requires U.S. regulatory approvals. Lazard was Parsons’ financial adviser on the deal and Cobham was advised by Stone Key Partners.
Cobham has been a steady buyer of U.S. defense and security companies. Last month, it said it has agreed to acquire California-based Trivec-Avant Corp., a global supplier of UHF satellite communication antenna systems, for $126 million. The pending deal includes a potential $18 million earn-out provision. Trivec had $22.4 million in operating profits last year.