1st Mar 2007 07:07
QinetiQ Group plc01 March 2007 QinetiQ Group plc 1 March 2007 Acquisition of ITS Corporation and disposal of Air Filtration Systems QinetiQ Group plc announces today that QinetiQ North America Operations LLC hasagreed to purchase ITS Corporation ("ITS"), a leading provider of IT servicesand solutions to the US government and its agencies, for up to $90.0m. QinetiQhas also sold its Air Filtration Systems, Inc. subsidiary ("AFS") to Donaldson,Inc. for $39.0m. The transactions are in line with QinetiQ's strategy to growits North American operations and to dispose of businesses that are non-core tothe Group. Acquisition of ITS Corporation The acquisition of ITS will be settled for an initial cash consideration of$80.0m and is expected to complete by the end of April 2007. The agreement topurchase ITS includes an additional deferred payment of $10.0m based on theachievement of certain short-term performance milestones. ITS Corporation is a privately-held US company, 25% owned by senior managers and75% owned by US private equity firm Riordan Lewis and Haden. The companyspecialises in providing IT systems, business process management and operationalsupport to federal government customers including the US Army, Navy andDepartment of Homeland Security. ITS brings to the QinetiQ Group a number of significant government-wideacquisition contracts (GWACs) including the General Services Administration'sAnswer and Millenia contracts. It also broadens the Group's customer base,bringing a range of longstanding customer relationships with the likes of the USintelligence community and a variety of agencies and departments within the Navyand Army. Approximately 90% of ITS's 700 employees work on customer sites and over 60%have security clearances. The addition of this skilled, security-clearedworkforce provides significant competitive advantage in its clearance-requiredbusiness, and enhances QinetiQ Group's operational capabilities in NorthAmerica. ITS had revenues of $77.5m for the 12 months ended 31 December 2006, EBITDA of$6.4m, and reported operating profit of $6.0m, after charging $1.2m ofnon-recurring costs related to acquisitions completed in late 2005. ITS hadgross assets of $58.5m at 31 December 2006. Approximately 90% of its revenue isderived from prime contracts. Disposal of Air Filtration Systems, Inc. Based in St Charles, Missouri, AFS is an industry leader in the design,development and manufacture of high performance engine inlet barrier filtrationsystems used in commercial and military propulsion systems, holding a strongposition on US Army aircraft. In the year to 31 December 2006, AFS had totalsales of $17.6m. QinetiQ is selling AFS because it provides limited cross-selling opportunitieswithin the Group, and because it is now ready for expansion into establishedcivilian markets where AFS will benefit from the synergy with an establishedsupplier into those markets. The transaction will be settled in cash and theproceeds used to reduce Group debt. Commenting on the transactions, QinetiQ's chief executive officer Graham Lovesaid: "Today's announcements demonstrate our determination to delivershareholder value both by growing our North American base and by realising valuefrom our businesses at an appropriate stage in their development." He continued: "ITS is an important addition to the QinetiQ North Americabusiness. The company has established relationships with 25 federal agenciesbuilt over a period of more than 30 years and its capabilities will broaden ourexisting service offerings, allowing us to bid for a wider range of significantopportunities in US defence and security markets. In addition, ITS operatesthrough a variety of large contract vehicles which should prove beneficial toall of the QinetiQ Group." (Ends) For further information please contact: Graham Love, Chief Executive: +44 (0) 1252 392000Doug Webb: Chief Financial Officer: +44 (0) 1252 392000 Nicky Louth-Davies, QinetiQ press office: +44 (0)1252 392809; +44 (0)7795290593David Bishop, QinetiQ press office: +44 (0)1252 394573; +44 (0)7920 108675Adrian Colman, QinetiQ investor relations:+44 (0)1252 395366; +44 (0)7740 432699 About ITS • ITS (www.itscorporation.com) is a registered international company with 700 employees, headquartered in Oxnard, California. ITS provides award-winning IT and engineering solutions to the U.S. military, intelligence and homeland security agencies, and other agencies of the Federal government. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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