STEWART PENNEY / LONDON
UK company is sixth addition to US conglomerate, and more purchases are on the cards
Acquisition-hungry EDO has bought privately held UK company Emblem Group as the US defence specialist drives for a near 40% revenue increase this year.
Emblem was acquired for £15.3 million ($25.4 million) and comprises Brighton, UK-based MBM Technology, and US-based Artisan Technologies and Aerotech IFE. Revenues for the group, which specialises in aircraft weapons interfaces and ruggedised computers, were £15 million last year.
EDO chairman and chief executive James Smith says Emblem is the sixth company acquired by the US conglomerate in the last two years. He adds that the company continues to seek acquisitions, but is unlikely to forge another deal until the fourth quarter of this year.
Three years ago EDO - whose specialities include weapons release systems, defence electronics, antennas, and composite structures - had annual revenues of $100 million. By 2002, the figure was $329 million, and the company is now predicting it will achieve $470 million this year, of which Emblem will contribute $10 million.
Growth, says Smith, has been "about 8% internal with the acquisition of 25-30%".
Smith says in recent years "we've looked at 85 companies, pursued less than 10 and bought six". The key to a successful acquisition is being "very careful", and suitable companies are those in which "the management knows the technology". The leadership must be strong and the target has to have "compatible culture" with EDO. "It's easier to buy than integrate", he says.
Smith says he would like to grow the renamed EDO MBM Technology to a $100 million revenue company "within a few years". It will benefit from input of US capabilities while MBM's rugged computers and other systems are likely to be used in EDO products, he adds. The rugged computers will be used in EDO's range of flightline test equipment, believes Smith.
The intention, however, is for MBM "to retain their UK flavour. We don't want the Ministry of Defence or primes to see them as a US company," says Smith.
MBM is part of Raytheon UK's Paveway IV team, which recently won the MoD's Precision Guided Bomb (PGB) programme. PGB is worth around £8 million to MBM and the company "will do around $30 million this year so it is growing anyway", says Smith.
Artisan Technologies will be wrapped into US-based EDO M Tech while the in-flight entertainment components business becomes EDO Aerotech.
Source: Flight International