Leidos to Buy Dynetics in $1.65B Deal

Leidos has inked a deal to acquire applied research and national security solutions company Dynetics, Inc. for $1.65 billion in cash, bolstering its position in defense, intelligence and civil markets.

The transaction was approved by both companies’ boards of directors, and once closed in the first quarter of 2020, Huntsville, Alabama-based Dynetics will operate as a wholly owned subsidiary of Leidos. Its CEO David King will lead the subsidiary and report to Leidos’ CEO Roger Krone.

And according to Krone, Dynetics and its talented team will deepen Leidos’ identity as a national security systems provider and enhance its platform for profitable growth.

“The addition of Dynetics will significantly increase our capabilities for rapid prototyping and agile system integration and production, enhancing our overall offerings and services to customers,” Krone said.

The transaction will also increase opportunities within Leidos Innovations Center, the company’s hub for research and developing new technologies and solutions, particularly accelerating efforts in hypersonics, space solutions, autonomy and advanced sensors, according to Krone.

“With Dynetics, we will build on our existing relationships with key U.S. Government customers, particularly in strategically important Huntsville, Alabama,” he said. “This transaction is projected to be immediately accretive to revenue growth, EBITDA margins, and non-GAAP EPS upon closing.”

Other strategic and operational benefits associated with the transaction include adding innovative capabilities in high-growth areas, expanding rapid prototyping and secure agile manufacturing and systems integration capabilities, bolstering Leidos’ footprint in Huntsville and expanding relationships with existing customers.

The transaction will also enhance the company’s talent to provide more value for customers, thanks to the addition of Dynetics’ more than 1,000 engineers and 1,000 technical specialists.

King said Dynetics is excited to be a part of the Leidos team, too, stating the transaction will enhance its ability to serve customers and ensure their future success.

“As we have continuously stated, Dynetics is more than just a company, we are a true partner, and today’s announcement will allow us to play an even bigger role serving and meeting the evolving needs of important U.S. Government customers,” King said.

The transaction is expected to be immediately accretive to Leidos’ revenue growth, and the company plans to fund the $1.65 billion cash transaction through a combination of cash on hand and incremental debt.