Mercury Systems to acquire Avalex Technologies

Pursuant to the terms of the agreement, Mercury will acquire Avalex for all cash, subject to net working capital and net debt adjustments. The acquisition is expected to be treated as an asset sale for tax purposes. The acquisition and associated transaction expenses are expected to be funded through a combination of cash on hand and Mercury’s existing revolving credit facility, a press release states. Avalex is currently expected to generate approximately USD 40 million in revenue for the twelve months ending December 31, 2022, with adjusted EBITDA margins of approximately 25%. The acquisition is expected to be immediately accretive to adjusted EPS. “Avalex’s product and technology portfolio is highly complementary to Mercury’s existing offering,” said Mark Aslett, Mercury’s president and chief executive officer. “With deep expertise in integrated displays, digital video recorders, and communications management, their suite of innovative avionics solutions uniquely position the Company to address and enable the growing demand for digitally converged solutions in the C4I and platform/mission management markets. Like our previous acquisition of Physical Optics Corporation, Avalex is also experiencing accelerated growth due to their strong product offerings and supply chain delayering by the Government. Finally, we see strong alignment in our strategies and vision, as well as our cultures, values, and commitment to innovation.” “Mercury is building an impressive business in the platform and mission management domain, and I believe Avalex will be an excellent complement to their portfolio,” said Tad Ihns, chief executive officer of Avalex. “Together we will be able to deliver one of the widest and most advanced portfolios of mission subsystems to a broader set of customers. We look forward to joining the Mercury team.” The acquisition is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is currently expected to close during Mercury’s fiscal 2022 second quarter ending December 31, 2021.