Hanover, Maryland-based cyber and geospatial services contractor KEYW Corp. (Nasdaq: KEYW) has agreed to purchase Herndon, Virginia-based national security technology provider Sotera Defense Solutions for $235 million cash in a push to add new and complementary work with the intelligence community and related government customers.
Both companies estimate the combined entity will generate close to $535 million in pro forma revenue for calendar year 2017 and maintain a portfolio of cyber, data analytics, cloud, engineering, analysis and operations, machine learning and geospatial support service offerings, KEYW said Wednesday.
KEYW noted it plans to fund the deal with cash on hand and proceeds from a credit facility arranged by investment bank RBC Capital Markets and expects to wrap up the acquisition in the second quarter of this year pending customary closing terms.
Sotera’s shareholders and the 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 CEO Bill Weber.
Formerly called Global Defense Technology & Systems, Sotera is owned by a group of Ares Management-led investment companies and currently supports various intelligence and defense agencies via prime positions on more than 12 indefinite-delivery/indefinite-
Sotera forecasts its 2017 revenue and adjusted EBITDA will reach $225 million and $20 million, respectively.
RBC Capital Markets and Guggenheim Securities act as financial advisers to KEYW while Morrison & Foerster and Holland & Knight respectively serve as its legal adviser and securities counsel on the acquisition.
Macquarie Capital and Sagent Advisors serve as financial advisers to Ares Management and Sotera, while Proskauer Rose acts as Sotera’s legal counsel.
Weber and KEYW’s current board of directors will lead the combined firm to be based in Hanover.