Skip to Content

Kratos pays $20m cash for integration business

Kratos pays $20m cash for integration business Deal adds $35m to $45m in revenues, gives Kratos PSS 'truly national presence'

SAN DIEGO—Kratos Defense & Security, which last year beefed up its systems integration business with the acquisition of Henry Brothers, on Dec. 30 paid $20 million cash to buy the security integration business of “one of its most formidable competitors.”

While the Kratos announcement does not name the competitor, sources tell Security Systems News that the company is Ingersoll Rand Security Systems, the systems integration arm of Ingersoll Rand Security Technology. Contacted by Security Systems News, Anne Wages of IR Corporate Communications said that the company is “in a quiet period and unable to comment at this time.”

Ben Goodwin, head of Kratos' Public Safety & Security division, said he could neither confirm nor deny the identity of the acquired business.

Goodwin said the acquisition give Kratos “a truly national presence” and puts the systems integrator among the top 10 integrators, in terms of revenue, in North America.

A Kratos announcement describes the acquired business as being part of a “large international public company … [that] designs, engineers, deploys, manages and maintains specialty security systems at some of the United States' most strategic asset and critical infrastructure locations. ... [The systems] are typically integrated into command-and-control system infrastructure or command centers.”

Kratos is projected to post $700 million in revenue for 2011. Kratos' PSS division did about $40 million before it acquired Henry Brothers in December 2010. The addition of Henry Brothers brought PSS revenues “in excess of $100 million” in 2011, Goodwin said. The Dec. 30 acquisition is expected to add “at least” $35 million to $45 million in revenue in 2012, according to a Kratos statement. It is also expected to add “$4 to $5 million in adjusted EBITDA after the realization of expected cost savings and synergies.”

Goodwin told SSN that previously Kratos PSS did not have a presence in the Southeast and Midwest. The new acquisition brings offices in Atlanta; Charlotte, N.C.; Orlando, Fla.; Miami; Chicago; Detroit; Toronto; San Francisco, and Boston. Offices located where Kratos already has a presence, such as Phoenix, Ariz., will be combined with existing Kratos offices.

The PSS operation now has 600 employees, Goodwin said. About 15 percent of the acquired business's revenues are recurring. “In this business, that's an important component,” Goodwin said. He also noted the acquisition also includes a 24/7 customer call center in Kansas City, Kan., “that customers can call at any time and get a real person who can take care of any customer issues.”

The Kratos statement notes that the acquired business “very importantly … has previously been awarded a multi-year security systems deployment at one of our country's highest-profile locations, with a potential future value of tens of millions of dollars, which provides added confidence in the success of this business going forward.”

In September 2008, Ingersoll Rand Security Technology won a $20 million security contract for the Freedom Tower at the World Trade Center in New York City.

“We believe in the physical security space and intend to continue to grow this business,” Goodwin said. “This is another step along the way to becoming a premier pure-play vendor agnostic systems integrator.” Goodwin said that many larger players supply both hardware and systems integration, but he believes Kratos' focus on the integration helps the company provide “the best solutions for our customers.”


To comment on this post, please log in to your account or set up an account now.