Serco agrees 292 million dollar purchase of QinetiQ’s US business
British services group Serco agreed to buy QinetiQ’s US business for 292 million dollars in cash, including an acquired tax benefit. The business provides engineering, technology and mission support. Serco targets completion in the first quarter of next year, subject to approvals, and has set out revenue and savings forecasts for the acquisition.
Economics & Markets··Evening
Serco and QinetiQ agree a cash transaction
British services company Serco agreed to acquire the US business of defence technology group QinetiQ for 292 million dollars. The agreement covers an engineering, technology and mission-support provider.[1], [2]
The cash price allocates 237 million dollars to the operating business and 55 million dollars to the present value of a tax benefit. Serco estimates that the benefit could yield more than 100 million dollars of cash tax savings over 12 years.[1]
Management sets revenue and savings targets
Serco forecasts approximately 370 million dollars of revenue and 21 million dollars of underlying operating profit from the acquired business in 2027. It targets annual savings of at least 3 million dollars by 2028. Its stated purchase multiple of 9.9 times uses the operating-business price and forecast profit including savings, excluding the tax asset and approximately 9 million dollars of acquisition and integration expenses.[1]
Completion depends on US approvals
Serco targets completion in the first quarter of next year, subject to US regulatory and security approvals and other conditions. The business has approximately 800 employees. Existing cash and committed borrowing facilities provide the funding. Management projects an increase of about 0.6 times in leverage while keeping the ratio within its 1–2 times target. Its current-year guidance and existing 150 million pound share buyback remain unchanged.[1]
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