KEYW makes two acquisitions

Jeffrey MacMillan/JEFFREY MACMILLAN - Len Moodispaw of KeyW stands outside building, in Hanover, Md.

In a bid to move into commercial work while also growing its business with the government intelligence community, Hanover-based KEYW made two acquisitions last week.

The company first said it would buy Annapolis Junction-based Poole & Associates, a systems and software engineering company which works with government intelligence agencies.

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KEYW said it will pay $126 million — $116 million in cash and $10 million in company stock — to acquire the 152-employee Poole, which generated about $24.8 million in sales in the first half of 2012. Poole is expected to produce sales of more than $35 million in the second half of the year, according to KEYW.

Later in the week, KEYW announced plans to purchase Redwood City, Calif.-based Sensage, a 35-employee company critical to KEYW’s “Project G,” a technology that uses automated tools to find and address cyber threats to networks. KEYW is planning to sell this technology to commercial businesses.

KEYW said it will pay up to $18 million in cash and $16.5 million in KEYW stock for Sensage, but $7.5 million of the cash and $3 million of the stock are contingent upon Sensage meeting certain revenue targets.

“The acquisition of Sensage accelerates our pace and our ability to respond to that demand” for Project G, said Leonard E. Moodispaw, KEYW’s chairman, president and chief executive. “We really acquired them for their disruptive technology [and] for their commercial experience.”

KEYW has started testing Project G and hopes to broadly release the technology early next year.

Other companies have found overlap between their work in the federal and cybersecurity sectors. Fairfax-based ManTech International has said it is marketing its cyber experience with federal agencies to the financial and energy industries. McLean-based Science Applications International Corp. and Booz Allen Hamilton also have government and commercial clients for their cybersecurity offerings.

David Z. Bodenheimer, a partner at Crowell & Moring, said contractors are finding that experience with the government helps in the commercial market.

“That ability to say that major federal agencies are buying it is something like a Good Housekeeping seal of approval,” he said.

In the case of the Poole acquisition, KEYW officials said the company was particularly interested in its new five-year contract with an intelligence agency worth up to $150 million.

At a predecessor company to KEYW, there was a program that “started out as $50 million contract,” said John E. Krobath II, KEYW’s chief financial officer. “After nine years, it’s probably up over $1 billion. The work is too important to worry about contract ceilings.”

 
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