QinetiQ to double size of US operation through MTEQ acquisition
$105 million acquisition of advanced sensing solutions provider will help QinetiQ to accelerate growth within United States market
QinetiQ has announced that it has entered into an agreement to acquire Manufacturing Techniques Inc. (MTEQ) on a cash-free, debt-free basis for $105 million.
MTEQ is a leading US provider of advanced sensing solutions with a reputation for mission-led innovation, rapidly developing and fielding operationally relevant solutions to deliver information advantage to the warfighter. The agreement is to be paid in cash on completion and a provision for additional payments of up to $20 million, in cash and shares, dependent on delivering ambitious financial performance targets over three years. In the 12 months to 31 August 2019, MTEQ generated $167.4 million of revenue, $11.4 million net profit and $11.0m of net profit on an unaudited basis.
Strategic acquisition will broaden customer base in US
MTEQ employs 360 people in Virginia and has built up strong relationships, particularly with the US Army, supporting a number of its modernisation priority programmes. The business develops next generation sensing solutions, including integrating outputs from multiple sensors, to provide information that enables operational advantage in the modern battlespace.
MTEQ is known for disruptive and agile innovation across the full cycle of sensor solutions development and use, including design, development, integration, low-volume production, deployment and analytics. Following completion, the business will continue to be led by its existing management team.
The strategic acquisition will accelerate QinetiQ’s growth in the United States by broadening its customer base in the world’s largest defence and security market. It will also leverage QinetiQ’s technical capabilities into the US, and routes to UK and international market.
The new acquisition will create a US operation of around $300m and 750 employees, delivering solutions critical to next generation warfighting capability through the combination of MTEQ’s expertise in advanced sensors, together with QinetiQ’s existing capabilities in robotics and autonomy.
Doubling the size of our operations in largest defence market
Steve Wadey, QinetiQ CEO, said: “The acquisition of MTEQ is a significant step towards achieving our ambition to build an integrated global defence and security company, more than doubling the size of our operations in the largest defence and security market in the world.”
“MTEQ is a growing business that is thriving because of its ability to apply state-of-the-art sensing technology to enhance information and intelligence that are so critical to modern warfare. I am excited that MTEQ will be joining QinetiQ as its core proposition of rapidly creating new and disruptive capabilities to respond to emerging threats is so well aligned to our own. I look forward to welcoming MTEQ expert employees and high quality leadership team to QinetiQ.”
Mary Williams, MTEQ President and CEO, said: “We are excited to be joining QinetiQ, a company renowned for its technical expertise. The combined businesses will have a leading position in technologies that are critical to next generation warfighting capabilities, enabling us to offer solutions to evermore complex and challenging customer requirements. Most importantly for me, QinetiQ and MTEQ share a common philosophy of partnership and collaboration with our customers, which will continue to be the foundation for our future success.”
The transaction is subject to regulatory and legal approvals and is expected to close in the second half of QinetiQ’s financial year 2020.