KeyW to Acquire Sotera Defense Solutions

Bill Weber, of KeyW

The KeyW Holding Corporation has announced that its wholly-owned operating company, The KeyW Corporation, has signed a definitive agreement to acquire Sotera Defense Solutions in an all-cash transaction valued at approximately $235 million, inclusive of an expected $46 million net present value of acquired tax benefits. The transaction is expected to be immediately accretive to 2017 adjusted EPS (GAAP EPS, excluding transaction expenses) and significantly accretive to 2018 GAAP EPS. Under the terms of the agreement, Sotera will become a wholly-owned subsidiary of The KeyW Corporation following the transaction.

“Both KeyW and Sotera deliver advanced technologies to the Intelligence, Cyber and Counterterrorism communities to secure our nation and its allies,” said Bill Weber, KeyW’s CEO. “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. This combination will provide customers access to these high-value solutions while also creating new opportunities for our employees and driving additional value for shareholders.”

Sotera Defense Solutions, formerly known as Global Defense Technology & Systems, Inc., is privately owned by funds managed by Ares Management, L.P. Sotera is a prime contractor on approximately 80% of its work, and is expected to generate an estimated $225 million in revenue and $20 million in adjusted EBITDA in calendar year 2017. The deal was brokered by RBC Capital Markets, Guggenheim Partners, LLC, the Macquire Group, and Sagent Advisors.

Deb Alderson, Sotera Defense Solutions

“We’re pleased to join forces with KeyW,” said Deb Alderson, CEO of Sotera Defense Solutions. “The customers, contracts and offerings of each business complement each other well and will be attractive for all stakeholders. Our team’s focus and solid execution made Sotera the superb company it is today. Sotera looks forward to working with Bill and the KeyW management team on a smooth integration that allows us to leverage our combined capabilities to create added near-term value for our customers’ vital missions.”

“This is an exciting and highly strategic deal for Bill and KeyW, giving them meaningful scale and diversification of capabilities, and Intel customers to allow for continued growth,” said Bob Kipps, managing director of KippsDeSanto & Co. “More broadly, this deal is another example of private equity groups tapping today’s robust M&A market to exit their legacy investments.”

“This transaction is demonstrative of the impressive national security platform that the team at Sotera has built,” said Matthew Cwiertnia, partner in the Ares Private Equity Group. “In particular, we want to thank Deb for her leadership and tireless commitment to the company. It has been a pleasure to be her partner.”

Related: STG Group Acquires Preferred Systems Solutions


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