Buying US defence

UK-based QinetiQ is to buy  McLean, VA-based Apogen Technologies in a $288 million deal. The US acquisition, which is subject to US regulatory approval, follows its purchase of Foster-Miller and Westar Defense and Aerospace in November 2004. QinetiQ has also signed a purchase agreement with technology development company Planning Systems this week for $42.0 million.

"US growth is central to our overall growth strategy," said Sir John Chisholm, QinetiQ's chief executive officer. "Our strategy in the US is to penetrate the defence and security markets by creating three operating businesses that reflect our three main routes to market - through the provision of ground-breaking technology, systems engineering and customer support, and information technology. Foster-Miller and Westar represent the first two businesses - and Apogen represents the third."

"Our US development from now on will be carried out principally through these companies, both by organic growth and through possible acquisition. This is illustrated by our acquisition this week of Planning Systems, a 350-strong technology development company based in Virginia, which will join Foster-Miller as part of the US technology business," he added.

Apogen does business in two main sectors, national security and federal technology, and is included in the US Department of Homeland Security's list of top 10 contractors and ranks at number 48 on Washington Technology's list of top 100 federal contractors. It posted revenues of $205.1 million in 2004, an increase of 12% on the previous year driven primarily by growth in demand for its homeland security offerings.

Apogen has approximately 900 staff in offices across the US. It will become a wholly-owned subsidiary of QinetiQ North America and will remain autonomous, retaining its name, core management team, staff and facilities.

Planning Systems, acquired by Foster-Miller on 26 July 2005, was purchased for $42.0 million and recorded revenues of $49.0 million in 2004.

This week's acquisitions bring the annual turnover of the QinetiQ Group to around $2bn. QinetiQ's annual results, released in July, highlighted a 33.1% rise in operating profits to £69.6m on turnover which rose by 9.7% to £872.4m and EBITDA before exceptional items of £108 million.