Ground control system manufacturer Integral Systems has acquired secure satcoms solutions firm CVG Inc and its subsidiary Avtec Systems for US$34.67m.
Under the terms of the transaction, Integral formed a subsidiary entitled Alpha Merger Corporation…
Ground control system manufacturer Integral Systems has acquired secure satcoms solutions firm CVG Inc and its subsidiary Avtec Systems for US$34.67m.
Under the terms of the transaction, Integral formed a subsidiary entitled Alpha Merger Corporation which then merged with CVG. The privately held sacoms specialist was then integrated into Integral’s Products Group as Integral Systems SATCOM Solutions.
Of the total cash consideration, approximately US$28.17m was paid to CVG’s shareholders, US$2.82m to holders of CVG’s share options, US$2.68m to repay the company’s outstanding debt to certain stockholders, and US$1m towards CVG’s advisory fees. The stockholders of CVG unanimously approved the deal.
The purchase price is just over CVG’s 2009 revenues of US$33m and approximately 9x its trailing 12-month EBITDA. Integral anticipates that the transaction will be earnings accretive in fiscal year 2010.
To partially fund the acquisition, Integral secured a US$55m senior secured revolving credit facility from Bank of America. The facility pays an interest of 300bp to 400bp over Libor, depending on Integral’s leverage ratio, and includes a US$10m sub-facility for the issuance of letters of credit. The debt is secured by a lien on substantially all of Integral’s assets including CVG.
Integral will draw down US$30m of the revolver to fund the CVG deal, while the remainder will be used to repay the company’s existing credit facility with BofA as well as for ongoing working capital and general corporate purposes.
Commenting on the acquisition, Paul Casner, President and CEO of Integral Systems, said “With this acquisition we broaden our customer base within the Department of Defense and civilian security agencies such as the Department of Homeland Security and the US Coast Guard. We also expand our customer footprint in the civil space and commercial market.
“I am particularly pleased with the incredible near-term synergies offered by this acquisition. From a technical perspective they expand our product offering into the satcom users’ ground infrastructure market… We think they will open up some market places that we have been anxious to get into for sometime now.”
Meanwhile, Integral has launched a new services unit called Integral Systems Service Solutions (IS3). The operation, which is scheduled to be officially launched later this year, will offer subscription-based SATCOM network operations services to satellite operators, resellers and users of bandwidth services.
The subsidiary has named Ernie Dickens, the former vice president of strategic business development at RT Logic, as vice president and general manager of the new unit.
