Kratos executes merger with Digital Fusion

Thursday, January 1, 2009

SAN DIEGO--Kratos Defense & Security Solutions, a government-oriented integrator and contractor, announced in December a merger agreement with Digital Fusion, a government services company based in Huntsville, Ala. Digital Fusion will merge with a wholly owned subsidiary of Kratos and all of DF’s outstanding shares will be converted into Kratos shares, at a ration of 1.7933 shares of Kratos for every share of Digital Fusion. Roughly 25 million Kratos shares will be issued, making the deal worth roughly $35 million.

Digital Fusion supplies the U.S. government with technical expertise in aerosciences and engineering analysis, sensor and space systems, optics, and systems engineering, among other things. Large customers include Army Aviation and Missile Research, NASA Marshall Space Flight Center, and certain classified customers.

According to a press release, once the merger is completed and the transaction is closed, Kratos will have approximately 2,250 employees. Approximately 80 percent of Kratos’ government employees hold national security clearance.

Imperial Capital acted as exclusive financial advisor to Kratos and Morrison & Foerster LLP served as legal counsel. For DFI, ISI Partners, LLC was financial advisor and Lanier, Ford Shaver and Payne P.C. served as legal advisor.