The share price of QinetiQ (QQ.) was boosted after the defence contractor revealed that it had agreed to buy the target systems division from industry rival Meggitt (MGGT) for £57.5m in cash. Around £10.2m of the sale proceeds will be put towards the reduction of Meggitt’s pension deficit.
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The division, which specialises in unmanned aerial, naval and land-based target systems, and markets the technologies globally from bases in the UK and Canada, is expected to make £28m in revenues and £5.5m in operating profit this year. Management expects the deal to be earnings accretive in the first full year of ownership, with returns exceeding the acquisition cost within the first three years.
