DHS Systems Is For Sale

TORONTO (Reuters) – DHS Systems, a manufacturer of high-tech shelter systems serving the military, is up for sale in an auction that drew final bids ranging from $200 million to $400 million on Friday, sources familiar with the matter said.

Only two bidders made it to the final round for DHS Systems, which is owned by private equity firm Carlyle Group and co-founders of holding company DHS Technologies, the sources said. They declined to be identified because the auction has not been made public.

One of the two final bidders for DHS Systems is Hunter Defense Technologies, owned by private equity firm Metalmark Capital Partners, the sources said.

Hunter makes products that provide shelter, heat, power generation and protection for military and homeland security applications.

The auction is being run by Morgan Stanley (MS.N), the sources said.

DHS Systems, Carlyle and Metalmark Capital declined comment.

DHS Systems, which makes Deployable Rapid Assembly Shelters shelters, is based in Orangeburg, New York. The company teamed up with Northrop Grumman Corp (NOC.N) last year to supply the U.S. Army with shelters that provide power for systems required to run a mobile command center.

Metalmark Capital is a New York-based private equity firm that has invested in companies in various sectors including energy and natural resources, healthcare, industrials and financial services.

The company, which made Hunter Defense Technologies a part of its portfolio in December 2007, made another foray in the defense industry last year. In December 2008, it made a majority investment in Schafer Corp, a provider of technical products and services to various defense arms of the U.S. government.

By Jui Chakravorty Das
(Additional reporting by Megan Davies in New York and Karen Jacobs in Atlanta; Editing by Steve Orlofsky)