08 Feb 2012
Further signal of consolidation in US defense sector as the giant contractor acquires photonic mast specialist.
US defense contractor L-3 Communications has completed its $210 million cash acquisition of Kollmorgen Electro-Optical from Danaher Corporation, in the latest sign of consolidation within the military sector.
Kollmorgen, previously part of Danaher’s “industrial technologies” business unit and headquartered in Northampton, Massachusetts, will subsequently become known as “L-3 KEO”. It specializes in submarine photonics systems and periscopes, fire control systems, visual landing aids, and ground electro-optic and sensor cueing systems. The division also has operations in Bologna, Italy, and employs some 550 people.
Danaher and L-3 had first announced the ownership transition in December, with Danaher saying that the division made sales of around $169 million in 2010. That compares with annual L-3 revenues currently exceeding $15 billion – of which some $3.6 billion related to the company’s C3ISR (Command, Control, Communications, Intelligence, Surveillance and Reconnaissance) division. L3-KEO will be included in L-3’s Electronic Systems reporting division, which posted 2011 sales of $5.5 billion.
For 2012, L3-KEO is expected to deliver earnings before interest, tax depreciation and amortization (EBITDA) of between $26 million and $30 million on sales of between $160 million and $170 million.
According to L-3’s most recent financial guidance, overall company revenues will likely fall by some 4% this year as the US defense budget shrinks. However, the shortfall will be felt almost entirely by L-3’s government services division, while the Electronic Systems unit is expected to decline only 2% and the C3ISR segment should grow modestly.
As part of L-3’s integrated sensor systems organization within Electronic Systems, the KEO division will augment existing expertise in electro-optical/infrared (EO/IR) technology addressing the air, ground and maritime markets.
“KEO expands and broadens our base in the EO/IR market, a key strategic growth area for L-3, and strengthens our position as a mission-critical sensor systems provider,” said Wes Motooka, president of L-3’s Integrated Sensor Systems Sector, after the initial announcement in December.
Motooka also noted that KEO’s technologies provide situational awareness to enhance current L-3 products, including ISR and targeting sensors, infrared imagers, laser range finders and optical assemblies.
Recent Department of Defense contracts won by KEO include:
• a $23.5 million agreement to provide check sights and targeting sensors for anti-surface and anti-air warfare (awarded July 2011);
• a $41.2 million initial contract to equip eight Virginia-class submarines with photonics masts that incorporate visible, infrared and electronics sensors (December 2010); • a $22.6 million contract to repair AN/BVS-1 and photonics mast variant imaging systems, and purchase the spare subassemblies and parts required to improve maintenance schedules (July 2010).
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