Kratos Defense & Security Solutions [KTOS] on Thursday said it is selling its Public Safety & Security (PSS) Division to Securitas Electronic Security, Inc. for $70 million, a divestiture that will allow it to focus on its defense business.
Kratos, which reported its fourth quarter financial results on Thursday, posted $751 million in sales for 2017, with PSS contributing $149.9 million. The PSS division had $127.1 million in sales in 2016.
Securitas had not commented on the pending acquisition by our deadline. The deal is expected to close within 90 days pending regulatory approval.
The PSS division’s product areas include video surveillance, access control, communications, building automation, fire and life safety, and maintenance and services for its products.
Kratos said the divestiture will strengthen its financial position, improving future growth and margin. The PSS division swung to a $3.8 million operating profit in 2017 from a $3 million loss the prior year. Overall, the company reported a $5.8 million operating loss in 2017 versus an $18.6 million operating loss in 2016.
“The sales of PSS virtually completes the successful execution of Kratos’ strategy to be a pure play defense high technology, product and systems provider,” Eric Demarco, the company’s president and CEO, said in a statement. “This divestiture will allow us even greater focus on our high growth core businesses including unmanned aerial drones, satellite communications, missile defense, training systems and microwave electronics.”
Canaccord Genuity is Kratos’ financial adviser on the deal.