(Adds CEO comments from second paragraph and share price in last.)
Sept. 29 (Bloomberg) -- Ultra Electronics Holdings Plc, the world’s biggest supplier of sonars used to detect submarines, is poised to acquire a U.S. target to expand in cyber-security, Chief Executive Officer Rakesh Sharma said.
Ultra, based in Greenford, England, announced today that it’s buying AEP Networks Ltd. for a maximum $75 million, and the additional U.S. purchase planned would bring the combined transaction value to about $170 million, Sharma said in an interview today. He declined to name the target or give an individual transaction value.
After entering the field of battlefield-code encryption 40 years ago, Ultra has its sights on protecting company computer networks from hackers. Defense-related contracts in that area currently account for 15 percent of Ultra’s annual turnover of 778.2 million pounds ($1.22 billion). Ultra is in the final stages of due diligence with its current takeover target, Sharma said.
“We look for growth areas and targets we can buy,” the executive said. “A lot of people have jumped into the cyber band wagon recently. For us it’s business as usual.”
The addition of AEP will help increase access to commercial clients as well as in government fields such as communication between embassies and state departments. AEP has more than 5,000 large companies and government departments on its books, giving Ultra “a route to market” into the commercial space, Sharma said.
U.S. and European defense cuts are triggering companies to expand their operations in areas such as cyber security, energy and commercial aerospace. Britain is slashing military budgets, scrapping a contract for BAE Systems Plc’s reconnaissance aircraft, cutting tank orders, delaying submarine replacement and opting for fewer, cheaper planes for two aircraft carriers, one of which may be sold.
Ultra Electronics shares were little changed at 1,548 pence in London as of 9:38 a.m., giving the company a market value of 1.1 billion pounds.
--Editors: Andrew Noel, Benedikt Kammel
To contact the reporter on this story: Sabine Pirone in London at email@example.com
To contact the editor responsible for this story: Andrew Noel at firstname.lastname@example.org