Leidos, a Virginia-based Fortune 500 leader in the science, defense and technology sectors, on Tuesday announced that it has entered into a definitive agreement to acquire Huntsville-based Dynetics, Inc. for $1.65 billion in cash.
Dynetics, which has been headquartered in the Rocket City since its founding in 1974, is a world-class applied research and national security solutions company, with large portfolios in the space and defense sectors.
The deal is expected to close in the first quarter of 2020. The boards of directors of both companies have unanimously approved the transaction. Leidos Holdings, Inc. is a publicly traded company (NYSE: LDOS), while Dynetics is 100% employee-owned.
Dynetics, which has offices across ten states, will become a wholly-owned subsidiary of Leidos under the agreement. The CEO of Dynetics will lead this subsidiary, reporting directly to the CEO of Leidos in that role.
As Dynetics is a leading provider of high-technology, mission-critical services and solutions to the United States government (with a proven history addressing our nation’s most challenging and technologically advanced missions), the acquisition will enhance Leidos’ leadership position across its defense, intelligence and civil groups. A press release added that the transaction will also accelerate opportunities within the Leidos Innovations Center (LInC), the company’s innovation engine that researches and develops new technologies and solutions to address the most challenging customer requirements.
“Dynetics is an innovative company with a talented team that will deepen our identity as a national security systems provider and enhance our platform to deliver sustainable, profitable growth,” Leidos chairman and CEO Roger Krone said in a statement.
Dynetics’ presence in Huntsville was named as an important aspect of the acquisition. Leidos expressed enthusiasm for Dynetics’ headquarters location, which provides close proximity to key customers and a strong campus environment with co-located engineering, manufacturing and test capabilities. The exemplary Dynetics team brings deep and well-established customer and community connections in an important national science, technology, aerospace and defense corridor in the Tennessee Valley.
“The addition of Dynetics will significantly increase our capabilities for rapid prototyping and agile system integration and production, enhancing our overall offerings and services to customers. Through the LInC, Leidos develops groundbreaking solutions leveraging a wide range of technologies. Dynetics will further accelerate those efforts, including in hypersonics, space solutions, autonomy and advanced sensors. With Dynetics, we will build on our existing relationships with key U.S. Government customers, particularly in strategically important Huntsville, Alabama,” Krone stated.
He continued, “Dynetics has a powerful suite of services and solutions and an outstanding team of employees driving its success. Together, we will advance our strategy of solving the toughest scientific and engineering problems by leveraging our collective strengths, driven by a shared commitment to innovation. We look forward to welcoming the Dynetics team to Leidos and working together to continue our united mission of excellence, ethics, integrity, and service to customers.”
A release from Leidos pointed to several specific benefits of the acquisition, including adding innovative capabilities in high growth areas and expanding rapid prototyping and secure agile manufacturing & systems integration capabilities.
Adds Innovative Capabilities in High Growth Areas: The addition of Dynetics represents an opportunity to grow in new, attractive segments, including hypersonics, space, and weapons solutions. In particular, Dynetics brings top programs in small glide munitions, hypersonics, and directed energy, which will be a complementary fit and growth driver within the Leidos Defense portfolio. The enhanced diversification of products and services will enable Leidos to capitalize on new opportunities for growth.
Expands Rapid Prototyping and Secure Agile Manufacturing & Systems Integration Capabilities: Dynetics’ rapid prototyping and secure agile manufacturing and systems integration capabilities will complement Leidos’ current ability within the LInC to further enhance innovation and help customers achieve their goals. Specifically, Dynetics’ prototyping expertise spans radars, air vehicles, weapons, c-UAS systems, space, and avionics. Through the transaction, Leidos will gain more than 350,000 square feet of production space, which will support full-cycle product development capabilities from concept through assembly, test and production.
“Dynetics is an innovator and an industry leader,” Dynetics CEO David King commented.
“This transaction will enhance and accelerate our ability to serve customers and ensure their future success. As we have continuously stated, Dynetics is more than just a company, we are a true partner, and today’s announcement will allow us to play an even bigger role serving and meeting the evolving needs of important U.S. Government customers. We are excited to be a part of the Leidos team,” King concluded.
Dynetics has more than 2,300 total employees, including over 1,000 engineers and 1,000 technical specialists. Leidos currently employs approximately 33,000 people.
UPDATED 5:40 p.m.:
In an email, Dynetics director of corporate communications Kristina Hendrix advised, “All of our employees will remain with the company, here (Huntsville) and across the country.”
The acquisition comes after Dynetics this summer announced plans to hire 700 new employees over five years.
Hendrix on Tuesday stated, “Currently, we have 195 job openings on our website. We are still planning to hire as our company has secured major wins such in hypersonics, directed energy, space solutions, intelligence and more.”
Sean Ross is the editor of Yellowhammer News. You can follow him on Twitter @sean_yhn