Securitas to Acquire Kratos Public Safety & Security for $70M

Kratos Defense & Security Solutions’ systems integration division has annual sales of approximately $135 million and includes 400 employees.

Securitas to Acquire Kratos Public Safety & Security for $70M

Closing of the acquisition is subject to regulatory approval, and is expected during second quarter of 2018.

STOCKHOLM — Securitas has agreed to acquire the systems integration division of Kratos Defense & Security Solutions (NASDAQ: KTOS) for approximately $70 million. The division, Kratos Public Safety and Security (PSS), will be combined with Securitas Electronic Security (SES).

The acquisition is expected to be neutral to Securitas earnings per share in 2018 and 2019, and accretive as of 2020, according to an announcement.

Kratos PSS is a leading system integrator in the United States. The division has annual sales of approximately $135 million and includes 400 employees. Its primary focus is electronic security projects for commercial customers with special expertise in transportation, petrochemical, healthcare and education vertical markets.

The division provides design, engineering, installation and service of advanced integrated security technology and systems. Kratos PSS has a wide breadth of capabilities including access control, video surveillance, intrusion and fire solutions supported by on-going maintenance, inspections and monitoring services.

Kratos agreed to divest the integration division for $69 million in cash. The company expects to ultimately receive approximately $70 million of net cash proceeds from the transaction upon taking into account amounts pursuant to a negotiated transaction services agreement with Securitas, receipt by Kratos of approximately $7 million in estimated net working capital, and associated transaction fees and expenses.

Flashback: Kratos Gears Up for More Security Conquests

“The sale of PSS virtually completes the successful execution of Kratos’ strategy to be a pure play defense high technology, product and systems provider,” says Eric DeMarco, Kratos president and CEO. “This divestiture will allow us even greater focus on our high growth core businesses including unmanned aerial drones, satellite communications, missile defense, training systems and microwave electronics.”

Kratos PSS aligns well with SES’s current operations and strategic focus, says SES President Tony Byerly, a member of SSI‘s Editorial Advisory Board.

“KPSS is an ideal acquisition for Securitas as it supports the global Securitas electronic security strategy and strengthens the company’s electronic security platform. In addition, it is an important next step in the execution of Securitas’ North American strategy to provide a complete range of protective services to the company’s collective customer base,” he says. “For SES, it expands our national footprint in the U.S., adds highly skilled associates to the team, and opens new markets and opportunities for future growth.”

Byerly emphasizes Kratos PSS was built from multiple acquisitions, including notable companies such as Henry Brothers and Ingersoll Rand Security Technologies.

“For us, this acquisition is about growth, strengthening our core capabilities, expanding our portfolio of security solutions, entering new markets and exploring new technologies to best serve our customers,” he says. “The addition of KPSS continues our mission to be best in class in our industry.”

Closing of the acquisition is subject to regulatory approval and is expected during the second quarter. Canaccord Genuity is serving as exclusive financial advisor to Kratos in connection with the transaction. Paul Hastings LLP is serving as legal counsel.

SSI continues to report this story.

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