Lockheed Martin Corp., the Pentagon's largest contractor, yesterday captured a bigger share of the British government's defense business with the acquisition of a Britain-based firm that develops weapons systems and military communications gear.
The Bethesda-based Lockheed's subsidiary in Britain will buy Insys Ltd., a firm that has done work on a wide range of programs for the British defense ministry, including biological detection, electronic warfare, missile defense and mobile artillery.
Insys had 47 million pounds of revenue in 2004, equivalent to about $85 million in today's dollars. The company has 480 employees. Terms of the deal were not disclosed.
This was the third significant acquisition for Lockheed this year and the second involving a firm from Britain. In February, Lockheed finalized its purchase of Stasys Ltd., a British technology and consulting firm.
Lockheed spokesman Jeff Adams said that Insys complements Lockheed's strengths and that the addition of the firm will give Lockheed a better shot at a larger number of contracts with the British government. "It aligns with our strategy of acquiring those select companies that fit in our wheelhouse," Adams said. "It fits right in with our systems and IT core focus areas."
Lockheed is already the largest supplier of information technology to the Pentagon, and that has been an area of especially rapid growth for the company in recent years.
Lockheed and Insys have worked with each other before on projects for the British defense ministry, which is the customer for three-quarters of Insys's work. "We have a long relationship with Lockheed Martin, and there's been some good synergy with them over the years," said Insys spokesman Chris Martin.
There have been a series of transatlantic deals among defense contractors this year, most notably British-based BAE Systems PLC's acquisition of Arlington-based United Defense Industries Inc. Paul Nisbet, aerospace industry analyst for JSA Research Inc., said the deals reflect the close relations between the British and American governments and their willingness to trust each other's contractors with sensitive national security projects.
Nisbet said Insys is so small that it won't make any difference in Lockheed's financial performance. "It's a pimple on a coconut compared with the rest of Lockheed," he said. But Nisbet said the move does reflect Lockheed's desire to expand its footprint internationally, and particularly in Britain. "This company will enable them to penetrate further into the U.K. market," he said.
Lockheed has about 130,000 employees worldwide, and it reported $35.5 billion of revenue in 2004. About 17 percent of its sales are outside the United States, a share that has been growing in recent years. Lockheed already has about 1,000 employees in Britain.
Adams said the company does not anticipate any layoffs as a result of the acquisition, which is expected to close by the end of the year. The Insys business will be jointly managed by Lockheed's London-based subsidiary and its Bethesda-based electronic systems division.