Harris buys CapRock

The global communications giant Harris Corp has acquired the satellite communications and network solutions provider CapRock for US$525m.
Harris said that it will finance the transaction through cash-in-hand, commercial paper, and existing credit…

The global communications giant Harris Corp has acquired the satellite communications and network solutions provider CapRock for US$525m.

Harris said that it will finance the transaction through cash-in-hand, commercial paper, and existing credit facilities. The transaction is expected to close in Q1 fiscal 2011.

Based on CapRock’s 2009 EBITDA of US$54m, the purchase price represents a multiple of 9.7x. The main selling shareholder is media-focussed private equity firm Abry Partners which originally bought a majority stake in CapRock from Genesis Park and Riverside for US$200m (a 6.6x EBITDA multiple) back in 2006.

CapRock, which is headquartered in Houston, Texas, is anticipated to contribute slightly to Harris’s earnings for 2011, and will be a much more significant presence from 2012 onwards.

Harris CEO and president Howard L. Lance said: “Acquiring CapRock expands our international presence and customer base, while increasing the breadth of our assured communications offerings. We see increasing demand for outsourced managed communications services that include secure high-availability networks, creating growth opportunities across a variety of markets.

“The acquisition provides an entry into the energy market, while expanding our present offering for the government and maritime markets to include managed satellite communications solutions. CapRock is a facilities-based global service provider that has made significant strategic investments in a self-owned and operated infrastructure to support demanding customer requirements. CapRock is a very successful company that shares our passion and commitment to mission-critical communications. It has an experienced management team with a track record of double-digit growth and profitability.”

The move is a good tie-up for privately-owned CapRock, which has been one of the most prominent success stories in the satellite business in recent years. It recorded revenue of US$359m in 2009, with EBITDA of US$54m. It operates in more than 120 countries and has substantial ground assets across the world.

CapRock’s main customers are in the energy, maritime and government markets and include Chevron, ExxonMobil, Halliburton and the US Department of Defence.

The acquisition strengthens Harris’ existing range of communications and technology solutions in the government and commercial markets. The group has annual revenue of approximately US$5bn.