Teledyne to buy Excelitas defense units for $710 million

THOUSAND OAKS, Calif. - Teledyne Technologies Incorporated (NYSE:TDY), a provider of sophisticated instrumentation and aerospace and defense electronics, announced it has agreed to purchase select aerospace and defense electronics businesses from Excelitas Technologies Corp. for $710 million in cash. The transaction includes the Optical Systems business, operating under the Qioptiq brand in Northern Wales, UK, and the Advanced Electronic Systems business in the U.S.

The acquisition is expected to enhance Teledyne's portfolio with advanced optics used in various military applications, including heads-up and helmet-mounted displays, night vision systems, and space and satellite technologies. Additionally, the deal will bring custom energetics and high-voltage semiconductor switches to Teledyne's offerings.

Robert Mehrabian, Executive Chairman of Teledyne, expressed enthusiasm for the acquisition, highlighting the complementary nature of the products and customer bases of both companies. George Bobb, President and Chief Operating Officer at Teledyne, also noted the strong performance of their aerospace and defense electronics segment and the compatibility of the acquired businesses with Teledyne's existing operations.

Doug Benner, EVP Excelitas and President Defense and Aerospace Segment, commented on the opportunities the acquisition will create, emphasizing the continued commitment to providing solutions for troop and asset safety.

The completion of the transaction is anticipated in early 2025, subject to regulatory approvals and customary closing conditions. Teledyne management expects the acquisition to be accretive to earnings per share, excluding transaction costs.

Evercore and Harris Williams are serving as financial advisors, while Fried, Frank, Harris, Shriver & Jacobson LLP is the legal advisor to Excelitas. McGuireWoods LLP is providing legal advice to Teledyne.

The announcement is based on a press release statement and contains forward-looking statements subject to various risks, including the ability to achieve anticipated synergies and integrate the acquired businesses effectively. Factors such as regulatory changes and market conditions could influence the actual results of the acquisition.

In other recent news, Teledyne Technologies Incorporated reported record sales in its third-quarter 2024 earnings call, driven by high demand in the defense, space, and energy sectors. Despite a slight decrease in Digital Imaging sales, the company's financial performance remains robust with $354 million in stock repurchases and a record backlog due to orders surpassing sales for the fourth consecutive quarter. Analysts from Jefferies and TD Cowen recently upgraded their price targets for Teledyne to $550 and $500 respectively, reflecting their positive outlook on the company's performance and prospects. The company's merger and acquisition landscape is reportedly improving, with management prepared to spend $2 to $3 billion on smaller companies. These recent developments indicate a proactive approach to growth and expansion. Teledyne anticipates modest sequential sales growth in Q4 2024 and has provided a cautious revenue estimate of $5.624 billion for the year amid global uncertainties. The company's operating cash flow has seen a decrease compared to the previous year. These are the latest developments in the company's performance and strategic moves.

InvestingPro Insights

As Teledyne Technologies (NYSE:TDY) moves forward with its acquisition of select aerospace and defense electronics businesses from Excelitas Technologies Corp., investors may find additional context from recent financial data and analyst insights.

According to InvestingPro data, Teledyne boasts a market capitalization of $21.41 billion, reflecting its significant presence in the aerospace and defense electronics sector. The company's P/E ratio of 22.93 suggests that investors are willing to pay a premium for its earnings, possibly due to growth expectations from acquisitions like the one announced.

InvestingPro Tips highlight that Teledyne has been profitable over the last twelve months and analysts predict continued profitability this year. This financial health aligns with management's expectation that the Excelitas acquisition will be accretive to earnings per share.

Moreover, Teledyne's stock is trading near its 52-week high, with a robust one-year price total return of 21.79% as of the latest data. This performance may indicate investor confidence in the company's growth strategy, including strategic acquisitions like the one described in the article.

It's worth noting that InvestingPro offers 9 additional tips for Teledyne, providing investors with a more comprehensive analysis of the company's financial position and market performance. These insights could be particularly valuable as the market assesses the impact of this significant $710 million acquisition on Teledyne's future prospects.

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