Securitas Finalizes Purchase of Kratos PSS Division

Securitas is assimilating the Public Safety & Security Division with the Securitas Electronic Security (SES) business to expand its systems integration platform in the United States.

STOCKHOLM — Securitas has completed its $70 million acquisition of the Public Safety & Security (PSS) division of Kratos Defense & Security Solutions (Nasdaq: KTOS). A purchase agreement was first announced Feb. 28.

The PSS systems integration division is being combined with Securitas Electronic Security (SES). The company states the acquisition will expand its “electronic security platform in the United States by strengthening field operation capabilities and adding local branch infrastructure with highly skilled employees. It supports Securitas’ strategy of providing protective services across the entire Securitas North American customer base, and brings increased value to our customers.”

For Kratos, the divestiture of its $150 million PSS business will allow it to focus on its defense work. The PSS division specializes in systems integration work around video surveillance, access control, communications, building automation and fire/life-safety solutions.

“This divestiture continues the successful execution of Kratos’ strategy of being a high technology product and systems aerospace and defense company,” Eric DeMarco, president and CEO of Kratos, said in a statement. He added that the deal means “greater focus and financial flexibility for our high growth core businesses, including unmanned aerial drones, satellite communications, missile defense, training systems and microwave electronics.”

Kratos agreed to divest the division for $69 million in cash. The company expected 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.

The acquisition is expected to be neutral to Securitas earnings per share in 2018 and 2019, and accretive as of 2020. Canaccord Genuity is serving as exclusive financial advisor to Kratos in connection with the transaction. Paul Hastings LLP is serving as legal counsel.

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