US engineering firm Alion’s naval systems unit will be sold for $225m to British firm Serco, in a deal set to close in the second half of the year.
The defence division of Serco Group plc provides shipboard, shore and systems installation and upgrade services to the US Navy.
Serco will buy Alion’s Naval Systems Business Unit (NSBU) for $225m. NSBU is a supplier of naval design, systems engineering, as well as production and lifecycle support services to the US Navy, US Army and Royal Canadian Navy.
In the 12 months to September 2018 NSBU had revenues of $336m, which compares with Serco’s North American Defence revenues in 2018 of $453m.
NSBU has an order book of around $600m and a new business pipeline of over $2bn. From its first full year of ownership in 2020, NSBU is expected to contribute revenue of about $370m.
The announcement of the acquisition prompted Serco’s shares to rise 9%.
Serco sets sail
The new business will continue to supply the US Navy, which has recently announced plans to increase the fleet from 280 to 355 ships by 2034.
Serco Group employs some 6,000 people in North America, 2,300 of these work in defence, and NSBU employs approximately 1,000 people.
The sale, subject to certain regulatory approvals, is expected to close in the second half of 2019.
“We are pleased to enter into an agreement to sell Alion’s NSBU business to Serco,” Steve Schorer, chairman and CEO of Alion, stated.
Commenting on the acquisition, Rupert Soames, Serco Group chief executive, said: “This is an important step for Serco which materially adds to the scale and capability of our US defence business, and in particular to the maritime support segment.
“The current management team of NSBU will continue to run the business and lead the integration into Serco, and we know they are as excited as we are by the opportunity to create a major new supplier of maritime engineering services, combining our joint capabilities in ship and systems design, modification and sustainment.”