Hanover, Maryland-based cyber and geospatial services contractor KeyWÂ (Nasdaq: KEYW) has agreed to purchaseÂ Herndon, Virginia-based national security technology providerÂ Sotera Defense Solutions for $235 million cashÂ in a push to add new and complementary work withÂ the intelligence community and relatedÂ government customers.
Both companies estimate the combined entityÂ will generate close to $535 million in pro forma revenue for calendar year 2017 and maintain a portfolio ofÂ cyber, data analytics, cloud, engineering, analysis and operations, machine learning and geospatial supportÂ service offerings, KeyWÂ said Wednesday.
KeyW noted it plans toÂ fund the dealÂ with cash on hand and proceeds from a credit facility arranged by investment bank RBC Capital MarketsÂ and expectsÂ to wrap up the acquisitionÂ in the second quarter ofÂ this year pending customary closing terms.
Sotera’s shareholders and theÂ board of directors at both companies approved the transaction.
“We share a common goal to expand our footprints among IC customers and leverage unique capabilities to significantly benefit existing and new customers, as well as add scale,” said KeyW CEOÂ Bill Weber.
Formerly called Global Defense Technology & Systems, Sotera is ownedÂ by a group of Ares Management-ledÂ investment companiesÂ andÂ currently supports various intelligence and defense agencies via prime positions on more than 12 indefinite-delivery/indefinite-
Sotera forecasts itsÂ 2017 revenue and adjusted EBITDA will reachÂ $225 million and $20 million, respectively.
RBC Capital Markets and Guggenheim Securities act as financial advisers to KeyW whileÂ Morrison & FoersterÂ and Holland & KnightÂ respectively serve as itsÂ legal adviser and securities counsel on the acquisition.
Macquarie Capital and Sagent AdvisorsÂ serve as financial advisers to Ares Management and Sotera, while Proskauer Rose actsÂ as Sotera’s legal counsel.
Weber and KeyW’s current board of directorsÂ will lead theÂ combined firm to be based in Hanover.