Britain’s QinetiQ on Wednesday said it has agreed to acquire the U.S. defense company Manufacturing Techniques, Inc. (MTEQ) for $105 million in cash, a deal that would double the size of the United Kingdom-based company’s operations in the U.S.
Terms of the deal also include an earn-out provision of up to $20 million in cash and shares contingent on MTEQ meeting certain financial targets over three years. The acquisition is expected to close during the second half of QinetiQ’s fiscal year 2020, which began on April 1.
MTEQ, which is based in Northern Virginia, has 360 employees and generated $131 million in sales in 2018. The company also had operating income of $8.4 million before interest, taxes, depreciation and amortization. MTEQ’s management team will remain with the company.
MTEQ provides sensing solutions for land and airborne operations, sensor systems integration, analytics, and fielding and sustainment services. The Army is a key customer, and other customers include the Navy, Air Force and Marine Corps, FBI, intelligence community, and industry.
QinetiQ said the acquisition will boost its capabilities in rapid development and get new products and services to market sooner. It also said the deal enables MTEQ to introduce its sensor solutions into larger production programs.
Once the deal closes, QinetiQ will have about 750 employees in the U.S., where its operations are expected to generate around $300 million in annual sales, 25 percent of overall corporate revenue.
“The acquisition of MTEQ is a significant step toward achieving our ambition to build an integrated global defence and security company, more than doubling the size of our operations in the largest defense and security market in the world,” Steve Wadley, QinetiQ’s CEO, said in a statement. “MTEQ is a growing business that is thriving because of its ability to apply state-of-the-art sensing technology to enhance information and intelligence that are so critical to modern warfare.”
QinetiQ operates in the U.S. through QinetiQ North America, which provides a range of unmanned ground systems, armor protection, maritime robotics, communications and naval control systems, and meteorological sensors.
QinetiQ expects the deal to be accretive to earnings in the first year of ownership.
MTEQ’s financial adviser on the deal is Baird and QinetiQ is being advised by Stephens.