Mercury Systems [NASDAQ: MRCY] Announces Acquisition of Avalex Technologies

Mercury Systems, Inc. [NASDAQ: MRCY] disclosed that it has inked a definitive agreement to purchase Avalex Technologies Corporation. Avalex has its headquarter in Gulf Breeze, Fla has gained a reputation as a provider of mission-critical avionics, including rugged displays, unified communications management systems, digital video recorders, and warning systems.

Mercury believed that this acquisition is highly beneficial for the firm as Avalex’s product and technology portfolio is highly corresponding to Mercury’s current offering. MRCY stated that Avalex’s suite of advanced avionics solutions uniquely position the firm to tackle and allow the increasing demand for digitally converged solutions in the C4I and platform/mission management markets.

Transaction Overview

In accordance with the terms of the agreement, Mercury will purchase Avalex for all cash, dependent on net working capital and net debt adjustments. The acquisition is likely handled as an asset sale for tax purposes. The purchase and related expenses of the deal are likely to be financed through a combination of cash on hand and Mercury’s current revolving credit facility.

Furthermore, Avalex currently anticipated generating around $40 million in revenue for the twelve months completed December 31, 2022, with adjusted EBITDA margins of roughly 25%. The acquisition is anticipated to be immediately profitable to adjusted EPS.

In addition, the purchase is dependent on traditional execution conditions, including authorization in accordance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is currently likely to finalize during Mercury’s fiscal 2022 second quarter completed December 31, 2021.