Military Embedded Systems

Mercury Systems buys radar and SIGINT subsystem provider Pentek for $65 million

News

May 27, 2021

John McHale

Editorial Director

Military Embedded Systems

ANDOVER, Mass.  Mercury Systems, Inc., continuing its run of acquisitions, purchased Pentek Technologies, LLC and Pentek Systems, Inc. (collectively, “Pentek”) in Upper Saddle River, N.J., for an all-cash purchase price of $65 million. Pentek, a competitor to Mercury's embedded signal-processing business, designs software-defined radio (SDR) solutions, FPGA single-board computers, data-acqusition boards, recording systems, and other products for radar, signals intelligence (SIGINT), electronic warfare (EW), and other high-performance defense applications.

The deal expands Mercury's market share within the EW, SIGINT, and radar markets, where Mercury is already a leader in signal processing and FPGA systems but also with its RF and microwave solutions. Both Mercury and Pentek are active in the Sensor Open Systems Architecture (SOSA) consortium.

“The acquisition of Pentek is an excellent fit for our market and low-risk content expansion strategy,” says Mark Aslett, Mercury’s president and chief executive officer. “Their capabilities add scale and breadth to Mercury’s existing mixed-signal product portfolio and deepen our penetration into our core radar, electronic warfare, and signals intelligence markets. Like our previous acquisitions in the RF and microwave domain, the acquisition of Pentek doesn’t just provide important new capabilities for our customers; it also enables us to grow the size of our total addressable market. We are very pleased to welcome the Pentek team to Mercury.” 

“I'm excited about the opportunity to bring new capabilities to Mercury's impressive mix of pre-integrated subsystems in support of numerous aerospace and defense programs and platforms," says Rodger Hosking, vice president, Pentek. "Our product-focused business model will provide a diverse portfolio of building blocks enabling low-risk content expansion at the module and subsystems levels."

The purchase agreement is still subject to net working capital and net debt adjustments. A portion of the acquisition is expected to be treated as an asset sale for tax purposes. The acquisition and associated transaction expenses were funded through a combination of cash on hand and Mercury’s existing revolving credit facility. For Mercury’s fiscal year ending July 1, 2022, Pentek is expected to generate revenue of approximately $20 million with profit margins in line with Mercury’s. The acquisition is expected to be immediately accretive to adjusted EPS.

For more information, visit mrcy.com.