Serco, a global services company based in Hart, England, is set to acquire Northrop Grumman’s mission training and satellite ground network communications software business. The $327 million cash deal is expected to be completed by mid-2025, subject to regulatory approvals, according to the company’s announcement on Thursday.
Mark Irwin, group chief executive at Serco, said the acquisition will boost the company’s growth potential in the U.S. defense market and in the provision of services to customers worldwide.
“The acquired capability delivers comprehensive, critical, technology-enabled services fully aligned to the U.S. military’s focus on enhancing warfighting standards and readiness through solutions that are both efficient and effective,” the Serco executive noted.
Revenue and Profit Projections
The Northrop Grumman business, called MT&S for short, will expand Serco’s scale in North America and support growth in revenue to over $2 billion and profit to $200 million, according to the company. For 2025, Serco expects the MT&S acquisition to generate $300 million in revenue and $34 million in operating profit.
The company anticipates that the purchase of the Northrop Grumman business will boost its capabilities to provide various mission-readiness needs of the U.S. defense market, such as synthetic training, exercise simulation and satellite ground network communications. It also projects an improvement in MT&S competitiveness, particularly in defense training services, with the business having a lower indirect cost base under Serco group’s contracting activities.
Serco’s recent U.S. military contracts include a potential $201 million indefinite-delivery/indefinite-quantity contract to provide technology services support for the U.S. Navy’s anti-terrorism missions.