Mercury Systems, Inc. announced that it has acquired Delta Microwave, LLC for $40.5 million in cash. Based in Oxnard, Calif., Delta designs and manufactures high-value RF, microwave and millimeter wave subassemblies and components for military and space markets. For its fiscal year ended December 31, 2016, Delta had revenues of approximately $12.8 million and is on a rapid growth trajectory supported by a strong backlog of funded orders.
“The acquisition of Delta Microwave is an excellent fit for our market and content expansion strategy,” said Mark Aslett, Mercury’s president and CEO. “Their strengths in high power, high frequency active and passive microwave components and subassemblies — particularly in GaN solid-state power amplifiers — are driving strong backlog and growth. These new capabilities add scale and breadth to Mercury’s existing RF, microwave and millimeter wave portfolio, expand our addressable market into satellite communications (SatCom), datalinks and space launch markets that are well-aligned with Mercury’s existing market focus and deepen our penetration into our core radar, electronic warfare (EW) and precision-guided munitions markets.”
“Additionally, Delta has a strong position on a number of franchise U.S. and international defense programs such as F-35, Paveway, MALD and Rivet Joint that complement Mercury’s presence. They have strong relationships with space OEMs, supplying future manned spaceflight missions as well as military and commercial satellite programs, representing a new growth area for Mercury.”
"In summary, like our previous acquisitions in the RF and microwave domain, the acquisition of Delta doesn’t just provide important new capabilities for our customers; it also enables us to grow the size of our total addressable market. We are very pleased to welcome the Delta team to Mercury,” Aslett concluded.
Under the terms of the purchase agreement, the $40.5 million purchase price is subject to net working capital and net debt adjustments. The acquisition is expected to be treated as an asset sale for tax purposes. The transaction presents opportunities for significant cost synergies in addition to the tax benefits.