NEW YORK--(BUSINESS WIRE)--Jul. 11, 2018-- L3 Technologies (NYSE:LLL) announced today that it has entered into a definitive agreement to acquire Azimuth Security and Linchpin Labs, two information security businesses that significantly strengthen L3’s existing C6ISR (Command, Control, Communications, Computers, Cyber-Defense and Combat Systems, and Intelligence, Surveillance and Reconnaissance) capabilities and create synergies to drive future growth in cyber and international markets.
“These acquisitions sharpen our capabilities, heighten our responsiveness and advance L3’s prime position as a C6ISR solutions provider,” said Christopher E. Kubasik, L3’s Chairman, Chief Executive Officer and President. “We are making targeted investments in cutting-edge technologies and integrating them with existing capabilities to support our domestic and international customers in strategically important business areas.”
Based in Australia, Canada, the United Kingdom and the United States, Azimuth and Linchpin operate in the strategic fields of computer network operations and vulnerability research for intelligence partners and other government, defense and security agencies around the world.
“These pioneering intelligence solutions – the ‘I’ in ISR – give our customers an intelligence advantage through next-generation network security and threat mitigation,” said Jeff Miller, L3’s Senior Vice President and President of its Sensor Systems business segment.
The acquired companies will become L3 Trenchant upon completion of the transaction and will help deliver advanced capabilities integral to a variety of complex ISR and classified missions.
The combined purchase price for the two businesses was approximately AUD$270 million (approximately USD$200 million). The purchase price is subject to an upward adjustment of up to AUD$43 million (approximately USD$32 million), payable in L3 common stock, based on the combined company’s post-acquisition sales for each of the 12-month periods ending June 30, 2019 to 2021, which would be payable in 2019 to 2021.
This transaction is anticipated to be completed during the second half of 2018, subject to customary closing conditions and regulatory approvals. For 2019, Trenchant is expected to add approximately $65 million to net sales after amortization of acquired deferred revenue and to be slightly earnings per share accretive after employee retention expenses and business combination purchase accounting adjustments, including intangible asset amortization expenses. The purchase price, excluding the potential contingent consideration (described above), represents a multiple of approximately 7x Trenchant’s estimated 2019 earnings before interest, taxes, and depreciation and amortization (EBITDA).
About Linchpin Labs and Azimuth Security
Linchpin Labs is a custom software development company with headquarters in Ottawa, Canada, serving corporate and government clients globally. The business was founded in 2007, with a particular expertise centered on computer network operations, cross-platform and low-level systems development, and IT security services.
Azimuth Security is an information security consultancy focused on in-depth analysis of software systems, including threat modelling and design, configuration and source code review. Azimuth is headquartered in Sydney, Australia, and serves enterprise clients and commercial software vendors.
About L3 Technologies
Headquartered in New York City, L3 Technologies employs approximately 31,000 people worldwide and is a leading provider of a broad range of communication, electronic and sensor systems used on military, homeland security and commercial platforms. L3 is also a prime contractor in aerospace systems, security and detection systems, and pilot training. The company reported 2017 sales of $9.6 billion.
To learn more about L3, please visit the company’s website at www.L3T.com. L3 uses its website as a channel of distribution of material company information. Financial and other material information regarding L3 is routinely posted on the company’s website and is readily accessible.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Except for historical information contained herein, the matters set forth in this news release are forward-looking statements. Statements that are predictive in nature, that depend upon or refer to events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “will,” “could” and similar expressions are forward-looking statements. The forward-looking statements set forth above involve a number of risks and uncertainties that could cause actual results to differ materially from any such statement, including the risks and uncertainties discussed in the company’s Safe Harbor Compliance Statement for Forward-Looking Statements included in the company’s recent filings, including Forms 10-K and 10-Q, with the Securities and Exchange Commission. The forward-looking statements speak only as of the date made, and the company undertakes no obligation to update these forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180711005079/en/
Source: L3 Technologies