KeyW to acquire Sotera Defense Solutions

KeyW said today it has agreed to acquire Sotera Defense Solutions for $235 million from private-equity firm Ares Management.

The deal, which is expected to close in the second quarter of 2017, will create a contractor focused on intelligence agencies with 2017 sales of about $535 million and approximately 2,100 employees.

Ares acquired Sotera -- then known as Global Defense Technology & Systems -- in 2011 in a deal valued at about $315 million, including the assumption of debt and prior expenses.

The $235 million sale price announced today includes an expected $46 million in acquired tax benefits, KeyW said. Sotera is expected to generate about $225 million in sales in 2017.

"Together, KeyW and Sotera will deliver an advanced portfolio of solutions, including cyber, geospatial, cloud and data analytics, engineering, analysis and operations and machine learning," the company said.

KeyW said the deal is expected to result in about $3.5 million of cost cuts within fiscal year 2017 and about $7 million over the next year to 18 months.

Sotera will become a subsidiary of KeyW. Bill Weber, KeyW's chief executive, will lead the combined company.

Additional leaders, KeyW said, will come from both companies and will be named later. The headquarters will remain in Hanover, MD, where KeyW is based.