SES buys US government solutions business
March 22, 2022
By Chris Forrester
SES is spending $450 million (€408.8m) to buy DRS Global Enterprise Solutions, a US subsidiary of Italian Leonardo DRS.
The transaction, which is expected to be completed during H2/2022 subject to regulatory approvals, the GES business will be combined with SES Government Solutions (SES GS), a wholly owned subsidiary of SES, which SES says will create “a scaled solutions provider serving the critical connectivity needs of the US Government.”
The DRS unit has an annual projected revenue of some $250 million. For over 20 years, DRS Global Enterprise Solutions has supported custom end-to-end satellite communications solutions for land, sea, and air operations for the US Government. The business is a government services provider with over $250 million of projected annual revenue, long-standing relationships with many key agencies, and expertise in delivering integrated satellite-terrestrial solutions notably in enterprise IT management and cyber security.
“This investment reinforces our commitment to provide industry-leading solutions and services for government customers while delivering sustained growth for SES in a high-value segment in which we have a track record of partnership and success,” said Steve Collar, CEO of SES. “I have long admired GES and its culture of long-standing relationships built on the delivery of high-performance, reliable, and mission critical connectivity solutions across the US Government. They are a best-in-class solutions provider and the combination with our own SES Government Solutions business will allow SES to serve the US Government with an expanded and enhanced set of advanced connectivity and network solutions leveraging the world’s largest multi-orbit satellite fleet.”
The consolidation of GES with SES GS is expected to add about $40 million of EBITDA and will benefit from the combination of future business expansion and $25 million of annualised run-rate synergies, including opportunities to support and enhance existing networks and services with the SES multi-orbit network.
The acquisition is expected to be earnings and free cash flow per share accretive from Day 1 and funded from existing financial resources. SES says it remains committed to maintaining a strong balance sheet consistent with investment grade ratios.