The $416M: Cobham plc Acquires SPARTA in USA
The small to mid-tier acquisition engine continues in the US defense industry. Fresh from its acquisition of BAE Systems’ Surveillance and Attack business in Lansdale, PA, British firm Cobham plc has reached agreement to purchase SPARTA Inc. for to $416 million on a debt and cash free basis. The acquisition is expected to complete in the second quarter of 2008, subject to regulatory and SPARTA shareholder approvals, and Cobham expects that the acquisition will be earnings enhancing in 2008.
The purchase price represents a 12.1x EBITDA multiple; SPARTA’s FY 2006 operating profit was $28.6 million on revenue of $297.3 million, with $122 million in gross assets. $381 million will be payable on completion and satisfied from Cobham’s existing cash and debt facilities. SPARTA an employee-owned US company which is SEC registered, but unquoted; the balance of up to $35 million will be paid over the next 3 years to holders of unvested options who remain with the company. Cobham plc release.
SPARTA, Inc. specializes in systems engineering, and has done a lot of work on missile defense projects, including Project Hercules. Subject to approvals, SPARTA will become a separate strategic business unit within Cobham’s North America Division. Cobham CEO Allan Cook sees SPARTA as providing: “…an exciting platform for growth in the Systems Engineering and Technical Assistance segment, which is complementary to our existing US intelligence and defence capabilities. This is a major step forward in the implementation of Cobham’s technology strategy and the creation of a significant Tier 2 business supplying the US DoD and intelligence markets.”