Reuters – Kratos Defense Buys Composite Engineering

Kratos Defense & Security Solutions Inc. said it will buy drone maker Composite Engineering Inc. for $155 million in cash and stock. California-based CEI makes aerial target drone systems and composite structures primarily for U.S. defense agencies. Kratos will pay $135 million in cash and $20 million in stock. Its eighth-biggest shareholder Oak Investment Partners will invest $55 million in cash for Kratos’ common stock to help fund the transaction.

(Reuters) – Kratos Defense & Security Solutions Inc said it will buy privately held drone maker Composite Engineering Inc (CEI) for $155 million in cash and stock.

 

California-based CEI makes aerial target drone systems and composite structures primarily for U.S. defense agencies. Its 2011 revenue was $94 million and adjusted EBITDA was $16 million.

 

Kratos will pay $135 million in cash and $20 million in stock. Its eighth-biggest shareholder Oak Investment Partners will invest $55 million in cash for Kratos’ common stock to help fund the transaction.

 

CEI, whose Chief Executive Mike Fournier said he approached Kratos last year to discuss a possible merger, has a current backlog of about $160 million, with a qualified bid pipeline of over $1 billion.

 

New York-based Sagent Advisors served as the exclusive financial adviser for Kratos. Janes Capital Partners advised CEI.

 

Kratos shares closed at $4.77 on Tuesday on the Nasdaq.