SPX Technologies Announces Agreement to Purchase Kranze Technology Solutions (“KTS”)
Rhea-AI Summary
SPX Technologies (NYSE:SPXC) has announced a definitive agreement to acquire Kranze Technology Solutions (KTS) for approximately $350 million in cash. KTS, headquartered in Des Plaines, Illinois, specializes in digital interoperability and tactical networking solutions, with strong ties to the US Marine Corps.
KTS is projected to generate revenue of approximately $90 million for 2025, with segment income margin and revenue growth rate above the Detection & Measurement segment average. The acquisition will be financed through SPX's revolving credit facility and is expected to close in Q1 2025, subject to regulatory approval.
This marks SPX's 15th acquisition since 2018, scaling their CommTech platform to over $200 million in revenue. The integration will enhance SPX's tactical datalinks and RF countermeasure offerings, particularly in US military platforms and the Asia Pacific region.
Positive
- Acquisition expected to be accretive to SPX's adjusted earnings per share in 2025
- KTS projected revenue of $90M for 2025 with above-average segment margins
- Expands SPX's CommTech platform to over $200M in revenue
- Strong existing relationships with US Marine Corps and secured positions in military platforms
- Significant tax attributes included in the purchase
Negative
- Substantial cash outlay of $350M increasing debt through credit facility usage
- Regulatory approval required under Hart-Scott-Rodino Act could delay closing
Insights
This
The acquisition's strategic value lies in three key areas: 1) It scales SPX's CommTech platform beyond
The acquisition of KTS significantly enhances SPX's tactical communications capabilities. KTS's digital interoperability solutions are particularly valuable in modern military operations where seamless information sharing across multiple platforms is critical. Their established position in US Marine Corps programs provides stable, long-term revenue streams typical of defense contracts.
The timing is strategic given the increasing focus on network-centric warfare and the need for sophisticated tactical networking solutions. The complementary fit with SPX's existing RF countermeasure and tactical datalink offerings creates a comprehensive communications suite that should strengthen their competitive position in defense procurement programs. The Asia-Pacific expansion opportunity is particularly relevant given regional tensions and increasing defense modernization efforts.
This marks SPX's 15th acquisition since 2018, demonstrating a consistent execution of their roll-up strategy in specialized technical markets. The transaction metrics suggest disciplined capital allocation - the purchase price relative to revenue and margin profile aligns with market multiples for defense technology acquisitions. The use of revolving credit facility for financing maintains flexibility while leveraging the current low-interest environment.
The margin profile being above segment average suggests potential for immediate earnings enhancement, while the tax attributes acquired could provide additional financial benefits. For investors, this represents a continuation of SPX's successful platform-building strategy, with clear pathways to value creation through operational synergies and market expansion.
Further Strengthens and Scales Communications Technologies Platform;
Significant Installed Base and Attractive Pipeline of Growth Opportunities
CHARLOTTE, N.C., Dec. 23, 2024 (GLOBE NEWSWIRE) -- SPX Technologies (NYSE:SPXC) announced today that it has entered into a definitive agreement to purchase Kranze Technology Solutions, Inc. (“KTS”), a leader in digital interoperability and tactical networking solutions. Upon closing, KTS will become a part of SPX Technologies’ Communication Technologies (“CommTech”) platform, within its Detection & Measurement segment.
Headquartered in Des Plaines, Illinois, KTS has developed a strong reputation for advanced digital interoperability and tactical networking solutions which integrate and distribute real-time information across multiple communications domains and platforms to enhance situational awareness, coordination, and tactical execution during operations. KTS has built trusted relationships with customers, particularly with the US Marine Corps, equipping KTS’ products on numerous marquee platforms.
Under the terms of the agreement, SPX Technologies will purchase KTS and certain significant tax attributes for approximately
The parties anticipate the closing of the transaction in the first quarter of 2025, subject to regulatory clearance under the Hart-Scott-Rodino Act. SPX Technologies intends to finance the acquisition by drawing on its revolving credit facility. After the interest cost of financing, the acquisition is anticipated to be modestly accretive to SPX’s adjusted earnings per share in 2025.
“We are looking forward to welcoming KTS to the SPX Technologies team,” said Gene Lowe, President and CEO of SPX Technologies. “Along with our TCI and ECS businesses, KTS is an excellent fit with our existing CommTech platform within our Detection & Measurement segment. KTS’ differentiated digital interoperability solutions are highly complementary to our existing tactical datalinks and radio frequency (RF) countermeasure offerings and bring significant and further growth opportunities to our business.”
Mr. Lowe continued, “KTS further strengthens and complements our long-term customer relationships and geographic footprint and brings a significant installed base, and secure long-term positions within growing, long-lifecycle US military platforms that rely on their highly differentiated technology. The Company has a strong pipeline of growth opportunities in the US and the strategically important Asia Pacific region.”
Mr. Lowe further commented, “This will be our 15th acquisition since 2018 and further validates our strategy of building high-quality, market-leading platforms. KTS will scale our CommTech platform to more than
Dr. Richard Kranze, KTS’ Founder and CEO, said, “The combination of KTS and SPX Technologies’ Communication Technologies platform is a natural next step in the growth of our business that will provide numerous opportunities for our employees and partners. Bringing together two leading communications technologies providers with SPX Technologies’ substantial resources, technological capabilities, and business system is a recipe for significant growth and value creation. The KTS team looks forward to working with the SPX team to build an even stronger, more valuable business.”
About KTS: Founded in 2008, KTS is a leading provider of digital interoperability and tactical networking solutions that drive superior situational awareness, interoperability, and increased survivability across multiple platforms and domains.
About SPX Technologies, Inc: SPX Technologies is a supplier of highly engineered products and technologies, holding leadership positions in the HVAC and detection and measurement markets. Based in Charlotte, North Carolina, SPX Technologies has more than 4,100 employees in 15 countries. SPX Technologies is listed on the New York Stock Exchange under the ticker symbol “SPXC.” For more information, please visit www.spx.com.
Investor and Media Contacts:
Paul Clegg, Vice President, Investor Relations and Communications
Phone: 980-474-3806
E-mail: spx.investor@spx.com
Source: SPX Technologies
FAQ
How much is SPX Technologies (SPXC) paying for Kranze Technology Solutions?
What is the expected revenue of KTS for 2025 after SPXC's acquisition?
When is the SPXC-KTS acquisition expected to close?
How will SPXC finance the KTS acquisition?
What will be the impact of KTS acquisition on SPXC's CommTech platform revenue?
How many acquisitions has SPXC completed since 2018?
