Madison Dearborn Partners and CoVant Management have agreed to sell LGS Innovations to CACI International Inc for $750 million. Based in Herndon, Virginia, LGS Innovations is a provider of command, control, communications, computers, intelligence, surveillance and reconnaissance and cyber products and solutions to the U.S. intelligence community and U.S. Department of Defense. UPDATE: Madison Dearborn expects to make 5x its money on the sale of LGS Innovations, a source said.
Chicago, Ill. and McLean, Va., January 30, 2019 – Madison Dearborn Partners (“MDP”) and CoVant Management (“CoVant”) announced today that they have signed a definitive agreement to sell LGS Innovations, a leading provider of command, control, communicatio ns, computers, intelligence, surveillance, and reconnaissance (“C4ISR”) and cyber products and solutions to the U.S. Intelligence Community and U.S. Department of Defense, to CACI International Inc (NYSE: CACI). CACI, which provides information solutions and services in support of U.S. national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers, will acquire LGS Innovations for $750 million.
LGS Innovations, the former federal division of Bell Labs, has a heritage as a trusted partner of the U.S. Federal Government extending back over 60 years. In 2014, MDP and CoVant acquired LGS Innovations in a divestiture from Alcatel-Lucent and have since grown LGS Innovations into one of the leading independent providers of secure networking, cybersecurity, laser communications/photonics, custom software development, and digital signal processing to government customers and commercial organizations serving U.S. national security interests.
Matt Norton, a Managing Director on MDP’s Business and Government Software and Services team, said: “We are proud to have worked alongside CoVant in our successful partnership with LGS Innovations. Over the past five years, we evaluated and supported significant R&D investments to grow the business organically – initiatives that we believe have benefited LGS Innovations’ customers and employees and our country. We wish the LGS team well as they start a new chapter, and we are confident they will continue to invent new groundbreaking technology products and capabilities as an important growth engine within CACI.”
Today, LGS Innovations is on a strong upward revenue and earnings growth trajectory. With approximately 1,300 employees, including more than 900 scientists and engineers and a world-class leadership team, the company possesses a successful track record in the development and deployment of mission-focused technological innovations and solutions to the U.S. national security, defense, and advanced research communities. These innovative products and capabilities include real-time spectrum interference detection and management systems, automated tools to diversify commercial software code and make it less susceptible to cyberattack, and space-qualified optical communications systems that enable high-speed data transmission by laser over distances approaching 150 million miles.
“We want to acknowledge the outstanding strategic execution of the LGS team during our ownership, and the important contributions they have made to their customers’ missions,” said Joseph Kampf, Chairman of LGS Innovations and Chairman & CEO at CoVant. “They are well-positioned to continue delivering innovative technology solutions for our national security as a part of CACI.”
Kevin L. Kelly, Chief Executive Officer of LGS Innovations, said: “We are thankful for the support of MDP and CoVant and their willingness to invest in our growth, and we are excited about the combination of LGS and CACI. We believe our market leading C4ISR and cyber capabilities and culture of innovation, along with CACI’s extraordinary channels to customers, and our shared mission focus will accelerate growth and market penetration for the combined enterprise.”
In 2012, MDP and CoVant formed a partnership to identify and secure equity investments in the federal government technology services and solutions market. Since creating an independent standalone LGS Innovations in April 2014, MDP and CoVant have invested in the business, increasing the company’s pipeline size, contract diversity and volume, penetrating new markets and missions, expanding and deepening LGS Innovations’ leadership team, and increasing EBITDA roughly 8x during their ownership.
In 2018, MDP and CoVant acquired LinQuest Corporation, a leading provider to the U.S. defense and intelligence communities of space systems technology solutions, including large-scale systems engineering and integration, software development, complex systems modeling and simulation, data analytics, and turnkey mission solutions.
Kirkland & Ellis LLP and Crowell & Moring LLP served as legal counsel and Bank of America Merrill Lynch (BofA Merrill Lynch) served as financial advisor to LGS Innovations. BofA Merrill Lynch has served as the sole or lead lender to LGS Innovations since the MDP/CoVant group’s investment in LGS Innovations in April 2014.
About LGS Innovations
LGS Innovations is a technology company delivering mission-critical communications products, R&D, and supporting services to U.S. defense, intelligence, and civilian agencies and commercial customers around the world. We create advanced solutions in wireless communications, signals processing and analysis, optical networking, photonics, routing and switching, and spectrum management. These solutions drive mission success in Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance (C4ISR), cyberspace operations, and network assurance. LGS Innovations is headquartered in Herndon, Virginia, with offices across the U.S. and overseas. We employ over 1,300 associates around the world, including more than 900 scientists and engineers. LGS Innovations: Listen. Innovate. Deliver. www.lgsinnovations.com.
About Madison Dearborn Partners
Madison Dearborn Partners (MDP), based in Chicago, is a leading private equity investment firm in the United States. Since MDP’s formation in 1992, the firm has raised seven funds with aggregate capital of approximately $23 billion and has completed approximately 140 investments. MDP is currently investing out of its most recent fund, $4.4 billion MDCP Fund VII, in businesses across a broad spectrum of industries, including basic industries; business and government software and services; financial and transaction services; health care; and telecom, media and technology services. For more information, please visit mdcp.com.
About CoVant Management
Founded by former executives of Anteon International, CoVant Management (CoVant) partners with and provides strategic, financial and operational resources to companies specializing in technology and related solutions that serve the needs of government customers. With an experienced team of business executives and a respected board of former government and military leaders, CoVant delivers a unique and highly strategic approach to maximizing company growth and value. Visit www.covant.com for more information.
About CACI International Inc
CACI provides information solutions and services in support of national security missions and government transformation for Intelligence, Defense, and Federal Civilian customers. A Fortune World’s Most Admired Company, CACI is a member of the Fortune 1000 Largest Companies, the Russell 2000 Index, and the S&P MidCap 400 Index. CACI’s sustained commitment to ethics and integrity defines its corporate culture and drives its success. With approximately 20,000 employees worldwide, CACI provides dynamic career opportunities for military veterans and industry professionals to support the nation’s most critical missions. Join us! www.caci.com.