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Kratos Buys Majority Stake in Turbine Engine Maker FTT, Forms New Business Unit

Kratos Defense and Security Solutions (Nasdaq: KTOS) has acquired a controlling interest in Florida Turbine Technologies for $60M in cash and stock and formed a new business unit as a result of the transaction.

FTT will operate as part of the newly created Kratos Turbine Technologies division, which will focus on the development and manufacturing of small jet engines for tactical weapons and unmanned aircraft systems within the company’s government solutions segment, Kratos said Thursday.

Stacey Rock, formerly senior vice president of the weapons and defense solutions business unit within Kratos’ defense rocket support services division, has been named president of the KTT division.

Rock said the transaction will allow Kratos “to compete for and participate in both new and upgraded weapons programs as an integral supplier of the airframe and propulsion systems.”

Kratos paid $33M in cash and $27M in common stock to purchase an 80.1 percent stake in FTT and has an option to buy the remaining interest in the turbine engine maker under the deal.

“The projected market for advanced turbojet and turbofan engines in our class alone is easily in the many thousands over the next five years given the projected number of extended-range and low-cost cruise missile systems and next generation unmanned weapons systems to be acquired,” said Kratos CEO Eric DeMarco.

“Through the acquisition of FTT, we have gained a tremendous capability to provide not only engines but also complete weapons systems,” DeMarco added.

Canaccord Genuity acted as Kratos’ exclusive financial adviser, while Paul Hastings LLP advised the defense contractor on the transaction’s legal aspects.

Jupiter, Fla.-based FTT was founded by Shirley and Joseph Brostmeyer in 1998 and focuses on the engineering, production and testing of gas turbines, propulsion components and other related platforms for military and industry applications.

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