Military Embedded Systems

Microsemi to sell RF & microwave, embedded security, and custom microelectronics businesses to Mercury Systems


March 23, 2016

John McHale

Editorial Director

Military Embedded Systems

CHELMSFORD, Massachusetts. Officials at Mercury Systems announced today that the company signed a definitive agreement with Microsemi Corp. to purchase its embedded security, RF and microwave, and custom microelectronics businesses for about $300 million. The additional RF and microwave technology should strengthen Mercury's capabilities in military radar and electronic warfare applications.

As of a twelve-month period ended September 27, 2015, these Microsemi businesses had combined revenues of about $100 million and pro forma standalone adjusted EBITDA of about $28 million. The businesses are primarily focused on the defense electronics market and employ a total of about 275 people based at facilities in Phoenix, Camarillo, California, San Jose, California, and West Lafayette, Indiana.

“The single transaction we’re announcing today covers all three major parts of our business and, in effect, positions Mercury as the defense industry’s largest commercial embedded secure processing company,” says Mark Aslett, Mercury President & CEO of Mercury. The acquisition adds secure solid-state storage to Mercury's portfolio, about doubles the size of the company's RF and microwave business, adding new capabilities, scale and synergies, he adds.

The transaction also "provides us with new capabilities in embedded security and mixed signal system-on-chip processing,” Aslett notes.

The acquisition and associated transaction expenses are expected to be funded via a combination of committed financing for a new $265 million bank term loan A and about $50 million of Mercury’s cash on hand. In addition to the term loan, the financing also includes a new $75 million revolving credit facility which is not expected to be drawn at closing. The transaction is expected to be highly accretive to fiscal 2017 adjusted EPS and adjusted EBITDA margin.

It is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is currently expected to close during Mercury's fiscal 2016 fourth quarter ending June 30, 2016.

For more information on the acquisition, visit Mercury management will also host a conference call and simultaneous webcast on Wednesday, March 23, 2016, at 5:00 p.m. ET to discuss the acquisition.

To join this call, dial (877) 303-6977 in the United States and Canada, or (760) 298-5079 in all other countries. Please call five to ten minutes prior to the scheduled start time. The live audio webcast and accompanying management presentation can be accessed from the 'Events and Presentations' page of Mercury's website at A replay of the webcast will be available two hours after the call and archived on the same web page for six months.


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