Serco's US arm closes $327M acquisition of Northrop's training business
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By
Nick Wakeman
Serco Inc. pushes its annual revenue past $2 billion and adds 1,000 employees to the now-10,000-person workforce.
Serco Group's U.S. subsidiary has completed its $327 million acquisition of Northrop Grumman's business unit focused on mission training and satellite ground network communications software.
The transaction, first announced in January, pushes Serco Inc.’s annual revenue to beyond $2 billion and adds another 1,000 employees to bring total headcount to 10,000 people.
Northrop’s MT&S business generates roughly $300 million in annual revenue and specializes in synthetic training, exercise simulation and ground satellite communications software for defense and space customers.
“It doubles our Army business and nearly doubles what we do with the Air Force,” Serco Inc.s CEO Tom Watson told Washington Technology when the acquisition was announced.
Serco Inc. also is positioning to pursue larger and more complex opportunities, he said.
The agreement closed after regulatory approvals, including a review by the Committee on Foreign Investment in the U.S. Serco Inc. has a U.K.-headquartered parent.
One key piece of business Serco Inc. is picking up is a 10-year, $800 million contract supporting the Air Force’s Distributed Mission Operations Network. This system connects simulator platforms across more than 100 Air Force sites and MT&S won the recompete in December.
The MT&S purchase marks Serco Inc.’s largest acquisition since its 2021 purchase of Whitney, Bradley & Brown and continues the buyer's strategy of expanding into higher-end services and training capabilities.
For Northrop Grumman, the divestiture allows the company to focus on its core business areas.
"This is an important capability for our customers, and we expect the team to continue to deliver world-class training services under new leadership," Northrop CEO Kathy Warden said during an earnings call in January.
Serco Inc. is also expanding its presence in space-related work through MT&S' satellite ground communications software capabilities, supporting the company's growing footprint in regions including the U.K., Australia and the Middle East.
Post-close, Serco Inc.'s business mix becomes roughly two-thirds in defense and one-third in civilian. Watson previously indicated that future acquisitions could come on the civilian side to diversify that part of the portfolio.