Home / M&A Activity / L-3 Strikes Potential $315M Deal to Buy Aviation Security Tech Maker MacDonald Humphrey

L-3 Strikes Potential $315M Deal to Buy Aviation Security Tech Maker MacDonald Humphrey

airportsecurityL-3 Communications (NYSE: LLL) has purchased U.K.-based aviation security technology maker MacDonald Humfrey Automation in a deal potentially worth up to $315.5 million for an effort to add new automation and robotic tools for deployment at airports worldwide.

The deal comes nearly one month after L-3 said it would purchase Implant Sciences‘ explosive trace detection business in a bankruptcy auction for $117.5 million in a similar move to grow security screening product offerings.

Prior to this transaction, L-3 has been an active player in the acquisition arena since the defense contractor sold its government services business to CACI International (NYSE: CACI) in February and disclosed close to $200 million in purchases since, including the deal for Implant Sciences.

L-3 executives indicated to investors in October they expected to progress toward additional deals before the end of this year and into early 2017.

New York City-based L-3 said Tuesday it will initially pay $280 million for Luton, England-headquartered MacDonald Humfrey and the purchase price could increase by up to $37.5 million based on post-acquisition performance between 2017 and 2019.

L-3 initially funded the deal from its revolving credit facility and expects to repay the amount from its free cash flow by the end of this year.

Macdonald Humfrey will operate under the name of L-3 MacDonald Humfrey as part of the acquirer’s electronic systems segment and L-3 expects the business to record $135 million in sales for 2017.

Founded in 1988 and currently with 350 employees, MacDonald Humfrey builds checkpoint management systems and security efficiency software for airports in Europe, the Middle East and Canada.

The company also has collaborated with U.S.-based airports and airlines to deploy new passenger and baggage tracking systems across the country in an effort to reduce checkpoint delays.

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