Parsons Corp. [PSN] on Monday said it has agreed to acquire Xator Corp.
in a $400 million deal that gives it an entrée into the counter-drone and force protection markets, adds the Department of State as a customer, bolsters its presence with U.S. Special Operations Command (SOCOM) and enhances its capabilities in the biometrics arena.
The acquisition is expected to close in the second quarter. Parsons said that Xator, which has more than 900 employees and is based in Northern Virginia, is expected to generate $300 million in sales and adjusted earnings before interest, taxes, depreciations and amortization (EBITDA) of about $32 million in fiscal year 2023.
Parsons expects to generate between $3.7 billion and $3.9 billion in sales this year.
Xator also expands Parsons’ presence with the intelligence community and federal civilian government. Parsons also highlighted that State Department as a new customer, which is expected to enjoy significant budget growth. Xator provides electronic security at U.S. embassies.
“The addition of Xator is a natural extension of our growth strategy, adding important solutions and technologies that advance global security and protect critical infrastructure during a time of increasing and evolving threats,” Carey Smith, chairwoman, president and CEO of Parsons, said in a statement. “This acquisition strengthens our position across our two complementary markets and continues our strategy of buying accretive, mission-focused companies aligned with global macroeconomic trends.”
In the biometrics space, Xator provides the Javelin series of mobile biometric collection kits that include fingerprint sensors, iris and face capture cameras, and centralize repository. The company’s customers for biometrics include the FBI and Defense Department.
For counter-unmanned aircraft systems (C-UAS), Xator provides integration and support.
Xator provides a wide range of critical infrastructure protection solutions including supply chain risk management, security operations center support, cybersecurity, intrusion detection, access control, automatic license plate reader recognition, and facial recognition.
Xator has a 7,000 square foot training facility in Tampa, Fla., where it works with Special Forces, law enforcement, and other skilled organizations. The company also has a 786 acre facility in West Virginia where it provides driving, firearms, and related hard-skills training, as well as research, development, test and integration support for law enforcement and specialized Defense Department customers.
Parsons said the acquisition is consistent with its strategy of buying companies with adjusted EBITDA margins of 10 percent or greater. Parsons expects the transaction to be accretive to its 2023 adjusted earnings per share and margin. The transaction is valued at $343 million and includes a $57 million tax benefit, bringing the value to $400 million.
Nearly 90 percent of Xator’s employees have security clearances.
Parson’s financial adviser on the deal is Goldman Sachs & Co.