QinetiQ Group plc
01 March 2007
QinetiQ Group plc
1 March 2007
Acquisition of ITS Corporation and disposal of Air Filtration Systems
QinetiQ Group plc announces today that QinetiQ North America Operations LLC has
agreed to purchase ITS Corporation ('ITS'), a leading provider of IT services
and solutions to the US government and its agencies, for up to $90.0m. QinetiQ
has also sold its Air Filtration Systems, Inc. subsidiary ('AFS') to Donaldson,
Inc. for $39.0m. The transactions are in line with QinetiQ's strategy to grow
its North American operations and to dispose of businesses that are non-core to
the Group.
Acquisition of ITS Corporation
The acquisition of ITS will be settled for an initial cash consideration of
$80.0m and is expected to complete by the end of April 2007. The agreement to
purchase ITS includes an additional deferred payment of $10.0m based on the
achievement of certain short-term performance milestones.
ITS Corporation is a privately-held US company, 25% owned by senior managers and
75% owned by US private equity firm Riordan Lewis and Haden. The company
specialises in providing IT systems, business process management and operational
support to federal government customers including the US Army, Navy and
Department of Homeland Security.
ITS brings to the QinetiQ Group a number of significant government-wide
acquisition contracts (GWACs) including the General Services Administration's
Answer and Millenia contracts. It also broadens the Group's customer base,
bringing a range of longstanding customer relationships with the likes of the US
intelligence community and a variety of agencies and departments within the Navy
and Army.
Approximately 90% of ITS's 700 employees work on customer sites and over 60%
have security clearances. The addition of this skilled, security-cleared
workforce provides significant competitive advantage in its clearance-required
business, and enhances QinetiQ Group's operational capabilities in North
America.
ITS had revenues of $77.5m for the 12 months ended 31 December 2006, EBITDA of
$6.4m, and reported operating profit of $6.0m, after charging $1.2m of
non-recurring costs related to acquisitions completed in late 2005. ITS had
gross assets of $58.5m at 31 December 2006. Approximately 90% of its revenue is
derived from prime contracts.
Disposal of Air Filtration Systems, Inc.
Based in St Charles, Missouri, AFS is an industry leader in the design,
development and manufacture of high performance engine inlet barrier filtration
systems used in commercial and military propulsion systems, holding a strong
position on US Army aircraft. In the year to 31 December 2006, AFS had total
sales of $17.6m.
QinetiQ is selling AFS because it provides limited cross-selling opportunities
within the Group, and because it is now ready for expansion into established
civilian markets where AFS will benefit from the synergy with an established
supplier into those markets. The transaction will be settled in cash and the
proceeds used to reduce Group debt.
Commenting on the transactions, QinetiQ's chief executive officer Graham Love
said: 'Today's announcements demonstrate our determination to deliver
shareholder value both by growing our North American base and by realising value
from our businesses at an appropriate stage in their development.'
He continued: 'ITS is an important addition to the QinetiQ North America
business. The company has established relationships with 25 federal agencies
built over a period of more than 30 years and its capabilities will broaden our
existing service offerings, allowing us to bid for a wider range of significant
opportunities in US defence and security markets. In addition, ITS operates
through a variety of large contract vehicles which should prove beneficial to
all of the QinetiQ Group.'
(Ends)
For further information please contact:
Graham Love, Chief Executive: +44 (0) 1252 392000
Doug Webb: Chief Financial Officer: +44 (0) 1252 392000
Nicky Louth-Davies, QinetiQ press office: +44 (0)1252 392809; +44 (0)7795290593
David Bishop, QinetiQ press office: +44 (0)1252 394573; +44 (0)7920 108675
Adrian Colman, QinetiQ investor relations:+44 (0)1252 395366; +44 (0)7740 432699
About ITS
• ITS (www.itscorporation.com) is a registered international company with
700 employees, headquartered in Oxnard, California. ITS provides
award-winning IT and engineering solutions to the U.S. military,
intelligence and homeland security agencies, and other agencies of the
Federal government.
This information is provided by RNS
The company news service from the London Stock Exchange
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