The Varley Group, an Australian engineering company that that competes in a number of industries, has established a subsidiary in the United States with an initial goal of acquiring a manufacturing company to help position it for long-term growth in the U.S. defense market.
Varley USA expects to secure its first deal around mid-2015, Jeff Phillips, CEO of The Varley Group, told sister publication Defense Daily
in an interview on Dec. 4. The initial acquisition will have to be in the company’s base, which is manufacturing, and will “get us locked in with our customers,” he said.
There are good candidates available for acquisitions, Phillips said, adding that the company would like to do deals in the $30 million to $50 million range.
Once the company lands its first target it will look for additional deals “where we can get much more specific in key technology plays that would enhance the whole offering that Varley brings to the market,” Phillips said. Varley will likely look for technology deals in the aerospace and space markets, he said.
Varley’s annual sales are around $108 million and it has 650 employees. Varley USA, led by Matt Hederstrom, is starting with three employees.
In the defense and aerospace industry, Varley’s core offerings are in the design and manufacture of advanced ground support equipment, shelters, military truck body modules, and transport and storage solutions.
Phillips said Varley doesn’t have standard offerings and instead makes customized products to help its customers.
“A lot of what we do is design lightweight transportable structures,” he said. “What we really do is what the customer wants to do and make it more operational for them. Everything is specifically designed to meet an end user’s requirement.”
For example, Phillips said, the Australian army had acquired satellite uplink, downlink technology and was transporting it in about 10 cases weighing about 600 pounds. It took them about seven hours to set up and make it operational. Varley redesigned the kit into one box weighing less than 90 pounds and the system could be operational in 10 minutes, he said.
Varley already works with a number of U.S. defense companies, including Boeing [BA], Lockheed Martin [LMT], and Northrop Grumman [NOC]. The company does work on both Australian and U.S. military programs, Phillips said.
One of the reasons Varley is establishing a U.S. presence is because U.S. companies “are encouraging us to be here,” Phillips said.
Varley is compliant with U.S. defense export regulations, known as the International Traffic in Arms Regulations, and wants to be able to export to Australia the products and technologies it develops and manufactures in the U.S., Phillips said.
Varley’s aerospace and defense business accounts for about one-third of the company’s business. Commercial ship repair, the legacy operation of Varley, currently makes up about 5 percent of the business, Phillips said. The company is also specialized and electric vehicles, rail services, and power services.