QinetiQ (QQ.) has agreed to acquire US sensing solutions specialist MTEQ in a deal worth $105m (£84m) upon completion, with the potential for a further contingent fee of $20m depending on the meeting of financial targets over the next three years.
The defence contractor will see the value of its US operation rise to annual revenues of approximately $300m and its headcount there climb to around 750 employees. US revenues will account for around a quarter of QinetiQ’s overall turnover. Returns from the acquisition are expected to exceed QinetiQ’s cost of capital in the third year of the tie-up.
On a call with analysts and investors, QinetiQ management said both the parent company and MTEQ have moved towards taking on longer-term contracts, thereby enhancing the rationale for the deal. MTEQ will be expected to ramp up its production capacity, and QinetiQ is prepared to help the business with shared facilities and investment.
The deal is expected to complete in the second half of QinetiQ’s 2020 financial year.
