Wärtsilä is acquiring L-3 Marine Systems International (L-3 MSI) from L-3 Communications Holdings in a US$353 million deal.
L-3 MSI is a business sector within L-3's Electronic Systems business segment primarily focused on the commercial ship industry.
The transaction is valued at $353 million, subject to customary adjustments including an estimated reduction of $74 million for L-3 MSI employee pension-related liabilities to be assumed by Wärtsilä. Financing for the deal will be from existing cash resources and credit facilities. The acquisition is subject to clearance from the regulatory authorities. The acquisition is expected to be closed during 2Q 2015.
L-3 MSI is expected to generate approximately $496 million of sales with an operating margin of approximately 6.5% for the year ending 31 December 2014.
Headquartered in Hamburg, Germany, L-3 MSI currently has more than 1700 employees in 38 locations in 14 countries. The company is well regarded internationally for its technology and systems integration capabilities. L-3 MSI delivers automation, navigation and electrical systems, as well as dynamic positioning technology, and sonar and underwater communications technology for the marine, naval and offshore markets. It has a leading position in the cruise & ferry and large container vessel markets. L-3 MSI's portfolio comprises various product brands, including SAM Electronics, L-3 Valmarine, Lyngsø Marine, L-3 Dynamic Positioning & Control Systems, Jovyatlas Euroatlas, L-3 Elac Nautik, Funa and APSS.
L-3 MSI has extensive experience in supplying a variety of vessel and offshore installation types. Combining this strength with Wärtsilä's engines, propulsion equipment, environmental offering, gas fuel solutions, and electrical & automation systems creates a unique offering that is unmatched by the competition. Both shipyards and owners serving the marine and offshore oil & gas sectors will benefit from this alliance.
"By combining forces with L-3 MSI, we create a powerful electrical and automation business, which is unique in its sector competence and breadth of capabilities. The deal is fully in line with our growth strategy to become the leading provider of innovative products and integrated solutions in the marine and oil & gas industries,” says Jaakko Eskola, Wärtsilä Sr. VP & president, ship power. “This enables us to have a dedicated focus on both markets with an industry leading portfolio that features solutions from both companies."
Wärtsilä foresees that the new unit will be able to capture new market opportunities and improve operational efficiency for its customers, thereby increasing both the sales and profitability of the business. The acquisition is expected to be EPS accretive as of 2015.
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