Technology and management services provider Serco Inc. announced it has entered a definitive Asset Purchase Agreement to acquire Alion Science and Technology Corp.’s Naval Systems Business Unit for $225 million.
The acquisition, which is expected to close in the second half of 2019, includes Alion’s Canadian business and some related contract operations — all falling under the company’s Naval Systems Business Unit, or NSBU. Ultimately, the deal would strengthen Serco’s placement in a few key growth areas: naval support and modernization and sustainment.
The company already provides shipboard, shore and systems installation, and upgrade services to the U.S. Navy, but Alion’s NSBU provides naval ship and submarine design and architecture, systems and engineering services, production support, lifecycle fleet support and in-service sustainment. It currently holds annual revenues of $336 million and has 1,000 employees at naval facilities in the U.S., Canada and worldwide.
According to Tom Watson, senior vice president of Serco’s Federal Services Business Unit, adding NSBU’s capabilities brings tremendous strategic value to the Serco group in general — not just in North America, but also for its global maritime support.
“Serco has a very strong international maritime presence,” Watson told WashingtonExec. “Both in the U.K., in Europe and in Australia. There are engineering and design capabilities that come with this acquisition that can be leveraged internationally. So, it’s really very, very attractive to the company, both from the U.S. perspective and international perspective.”
Under Serco, NSBU would keep its current management team and staff, but operate as a new Serco business unit. Vince Stammetti, senior vice president of Alion’s NSBU, is expected to serve as senior vice president of the new Serco business unit.
According to Dave Dacquino, Serco chairman and CEO, this was a targeted capability the company was after, completing Serco’s portfolio as a total engineering and logistical services, top-tier provider for Navy.
“Combining our existing C5ISR capabilities in ship, shore, satellite and radar modernization with the naval design and engineering capabilities of NSBU will make Serco a top-tier Navy services provider with a full-spectrum, design-integrate-support life cycle maritime offering,” said Dacquino.
That full lifecycle aspect was crucial, because Serco doesn’t sell the Navy hardware.
“We actually sit on their side of the table and we help them assess hardware,” Dacquino told WashingtonExec. “Now, we do that from the engineering side, straight on through.” And that’s the important part for Serco — to complete a full lifecycle support for anybody in the maritime arena.
And now, the Royal Canadian Navy is a critical customer for Serco.
A few of NSBU’s additional key customers are the Naval Sea Systems Command and its Surface and Subsurface Warfare Centers, the U.S. Army watercraft, the U.S. Office of Naval Research and the U.S. Coast Guard. Plus, the unit is already qualified under the government’s foreign military sales program to provide shipboard engineering services to allied services and is exploring next-generation naval technology like Unmanned Surface and Underwater Vehicles.
But this acquisition isn’t about scale or increasing the size of the company. Dacquino said Serco’s focus is about providing full capability and service, and this acquisition allows the company to do for its entire maritime presence.
“This is a growth-oriented strategic acquisition that brings Serco highly valued technical talent, and we look forward to the new opportunities this transaction will create across both organizations,” Dacquino added.
With NSBU, Serco intends to become a strong, full lifecycle, integrated maritime solutions provider for the U.S. Navy, Canadian defense business and beyond.
In terms of integration, Dacquino believes culturally, Serco is the right home for NSBU.
Serco is an ideal partner for NSBU going forward, because of its longstanding experience with the Navy, commitment to excellence in technical services and international reach, Stammetti said.
“Having supported nearly every major U.S. Navy ship design program for the past 40 years, we are very optimistic about the opportunities for growth as the U.S. Navy executes its 30-year shipbuilding plan to achieve a 355-ship fleet,” he said. “Together with Serco, I feel confident that we will be able to successfully pursue even larger opportunities and deliver greater value to our customers.”