Overview

Deal closed: October 2016
Oasis M&A mandate: sell-side
Sectors: Defence, Engineering, Technology, Manufacturing
Sub-sectors: Electronic warfare

Background and motivation

Micreo is an electronics warfare business based in Australia. The shareholders of Micreo were looking for a strategic exit that would enable the business to grow globally while looking after employee and customer needs.

Challenges

Given the small and specialist niche Micreo work in and the disparate nature of defence companies globally, the key campaign challenge was to gather global interest in the business without divulging critical detail about their specialty that would compromise anonymity.

To manage this, we referred to Micreo only as a defence or aeronautics engineering business during initial contact with our target list. Additional detail was only revealed as the acquirer was further qualified. This ensured that Micreo shareholders were under no risk of destabilisation from public knowledge of a potential sale.

Once the acquirer was found, the challenge was effectively managing negotiations and communications with a global array of stakeholders. L3’s head office is in USA, L3’s subsidiary in electronic warfare most closely aligned with Micreo (L-3 TRL) was in the UK and we were in Australia.

Though a logistical challenge, this was readily managed thanks to modern communications technology without which this kind of deal was much more difficult in the past.

Approach

Numerous targets across the defence, technology and engineering sector globally were approached with the proposition of acquiring Micreo, however only L-3 had a strategic acquisition objective at that point in time that aligned with Micreo’s offering.

The strategic advantage for L-3 in the acquisition was both expansion into the Australian market as well as to integrate Micreo with their existing UK division L-3 TRL, part of the Integrated Sensor Systems (ISS) sector within Electronic Systems, L-3’s largest and most diverse business segment.

Within ISS, L-3 delivers sensor solutions in all domains – from submarines to surface ships, soldiers, ground vehicles, and airborne and space platforms and it expects L-3 Micreo to play a critical role in helping to further expand its business in these areas with particular focus on the EW portfolio.

“Micreo not only complements L-3’s increasing portfolio of ISR and EW system capabilities but also increases our presence in Australia and supports a number of opportunities we are currently pursuing,” L-3’s vice president in Australia Alan Titheridge said.

“We set out to find a shareholder exit that would enable the business to grow and to look after employee and customer needs as well as satisfy our shareholders,” Tim Shaw, Micreo CEO explained.

“I’m satisfied that we have achieved those aims and the company will continue to grow and to provide rewarding and interesting work.”

Shaw will be taking on the role of Chairman at L-3 Micreo and the entire management team will continue their work at the new company.