New York-based private equity firm Veritas Capital is exploring the sale of two high-tech portfolio companies, worth nearly $3 billion in total, as it looks to raise cash to fund new deals this Fall, people familiar with the matter told Reuters.
The potential sales of electronics component maker Excelitas Technologies Corp and radar component-maker Anaren Inc would be a major boost for the U.S. Aerospace and defense-related M&A landscape, which has seen just $1 billion worth of deals so far this year – a 46% drop on the same period in 2016.
Veritas has hired investment bank Goldman Sachs Group Inc. (GSJ) to pursue a so-called dual track sale process for Excelitas which could see the Massachusetts-based company sold outright or floated via an initial public offering, the people said. If successful, Excelitas could fetch as much as $2 billion, they added.
The private equity firm, which has investments in several national security and tech-sector assets, has also hired bankers to offload Anaren in a separate deal that could be worth more than $800 million, the same people told Reuters.
Spokespeople for Veritas and Goldman Sachs declined to comment. Excelitas and Anaren did not immediately respond to a request for comment. The sources spoke on condition of anonymity because they were not authorized to discuss the talks.
Excelitas makes products such as light-emitting diodes (LEDs) and flash lamps which are used in applications ranging from medical lighting to aerospace and defense equipment.
Anaren produces microwave components for wireless, space and defense electronics providers and counts Raytheon Co, Lockheed Martin Corp., and Northrop Grumman Corp as customers.
The New York-based company’s microwave assemblies are used in the United States’ Long Range Discrimination Radar (LRDR), the system the U.S. Military is developing to track intercontinental ballistic missiles launched from places like North Korea.
Barren Landscape
Deals in the aerospace and defense industry have slowed this year after the election of President Donald Trump sent asset prices soaring, making many buyers hold off on deals.
Bucking the trend is a potential $20-plus billion mega-deal between two aircraft parts-makers United Technologies Corp. And Rockwell Collins Inc., first reported on 4 August.
The barren landscape could be could be good for Veritas, with many cash-rich buyers on the scout for assets, but the sensitive nature of the technology involved is also expected to invite intense U.S. Regulatory scrutiny, bankers said.
Veritas created Excelitas by acquiring the former illumination and detection solutions business of scientific instruments maker PerkinElmer Inc. For about $500 million in 2010.
Excelitas went on to acquire more companies, including Kaiser Systems Inc, a manufacturer of high-voltage power systems, and Qioptiq, a maker of specialized optical components and lenses.
Veritas had previously attempted to sell Excelitas in 2014, Reuters reported at the time, but no deal was reached.
In 2014, Veritas paid $383 million to take Anaren private, delisting it from the NASDAQ stock exchange.
Both sales are in their early stages and could be called off at any time, the people said.
