Huntington Ingalls to buy Alion in $1.65 billion deal

By Marjorie Censer  / July 6, 2021

Huntington Ingalls Industries said this morning it has agreed to acquire Alion Science and Technology for $1.65 billion, significantly growing HII's technical solutions division.

Under the deal, which is slated to close later this year, HII will gain more than 3,200 Alion employees and its TS business will grow to about 25% of the company's sales.

In a call with analysts today, Mike Petters, HII's chief executive, said the acquisition reflects the company's effort to position for the future.

"We have a big platform business -- that's been our core," he said. "What we see happening in the big platform business is the platforms are the base for enhancing a future Navy that's going to rely . . . on unmanned, it's going to rely on distributed operations and it's going to look for asymmetric solutions."

"We are looking to go to where the puck is going to be," Petters added.

The Navy is Alion's biggest customer, making up about one-third of sales. Alion specializes in intelligence, surveillance and reconnaissance; military training and simulation; cybersecurity; data analytics and other technology for Pentagon and intelligence agencies.

The McLean, VA-based Alion was purchased by private-equity firm Veritas Capital in 2015.

Petters told analysts he views the company as "directly aligned" with Huntington Ingalls' technical solutions business.

He argued the deal doesn't reflect an effort to diversify, but is instead a way to bolster the company's core shipbuilding work.

"I resist the notion that this is actually a diversification" play, he said. "This is actually an extension of our main product."

HII has been steadily growing its technical solutions business, which includes its unmanned unit, with acquisitions.

The contractor earlier this year acquired the autonomy business of Spatial Integrated Systems and last year picked up Hydroid.