ITT Completes Acquisition of kSARIA, Leading Manufacturer of Mission-Critical Aerospace and Defense Connectivity Solutions

Rhea-AI Summary

ITT Inc. (NYSE: ITT) has completed its acquisition of kSARIA Parent, Inc., a leading manufacturer of mission-critical connectivity solutions for the aerospace and defense sectors. The acquisition, announced on Aug. 1, 2024, is funded through a ~$460 million term loan and cash on hand. kSARIA, with $175 million in sales in 2023, produces engineered cable assemblies for avionics, sensors, and communications applications. Operating in a $7 billion addressable North American defense market, kSARIA is expected to benefit from global defense build-up and investments in new platforms. The company, now part of ITT's Connect & Control Technologies segment, has 1,000 employees across six North American manufacturing sites.

Positive

• Acquisition expands ITT's presence in the growing aerospace and defense connectivity market
• kSARIA's products complement ITT's existing connector portfolio
• kSARIA operates in a market expected to grow at a high-single digit CAGR through 2028
• Nearly 70% of kSARIA's positions are sole or primary source, indicating strong market position
• Acquisition provides access to kSARIA's proprietary engineering and manufacturing capabilities
• kSARIA's existing positions on coveted platforms and customer relationships offer growth potential

Negative

• Significant debt incurred with ~$460 million term loan to fund the acquisition
• Integration challenges may arise from incorporating kSARIA's 1,000 employees and six manufacturing sites
• Potential risks associated with the cyclical nature of the defense industry

Insights

Financial Analyst

ITT's acquisition of kSARIA is a strategic move that significantly enhances its position in the aerospace and defense connectivity market. The $460 million term loan for this acquisition indicates ITT's confidence in the long-term value of kSARIA. With kSARIA's $175 million in sales for 2023 and its strong market position, this acquisition could drive substantial revenue growth for ITT's Connect & Control Technologies segment. The expected high-single digit CAGR through 2028 in the $7 billion addressable North American defense market presents a significant growth opportunity. However, investors should monitor how quickly ITT can integrate kSARIA and realize synergies to justify the acquisition cost.

Aerospace Industry Expert

This acquisition strategically positions ITT to capitalize on the growing demand for advanced connectivity solutions in aerospace and defense. kSARIA's expertise in cable assemblies for avionics, sensors and communications complements ITT's existing connector portfolio, potentially leading to more comprehensive offerings. The sole or primary source position for 70% of kSARIA's products indicates strong market entrenchment and potential for sustained revenues. With global defense spending on the rise, particularly in electronic system upgrades and soldier modernization, ITT is well-positioned to benefit from these trends. However, the challenge lies in maintaining kSARIA's innovation edge and customer relationships post-acquisition.

Market Research Analyst

The acquisition of kSARIA by ITT is a calculated move to expand its footprint in a high-growth sector. The North American defense market's projected growth rate is particularly attractive, especially given the current geopolitical climate driving increased defense spending. kSARIA's strong presence in mission-critical applications and its six manufacturing sites across North America provide ITT with enhanced production capabilities and market access. This acquisition could potentially accelerate ITT's revenue growth and improve its competitive position. However, investors should watch for any integration challenges or potential market saturation that could impact the expected growth trajectory.

STAMFORD, Conn.--(BUSINESS WIRE)-- September 12, 2024-- ITT Inc. (NYSE: ITT) today announced the completion of its acquisition of kSARIA Parent, Inc. (kSARIA), a leading producer and supplier of mission-critical connectivity solutions for the defense and aerospace end markets. ITT previously announced the acquisition on Aug. 1, 2024. The acquisition will be funded through a combination of a ~$460 million term loan entered into today and cash on hand.

kSARIA produces highly engineered cable assemblies for avionics, sensors, communications and networking applications that are highly complementary to ITT’s existing connector portfolio. It operates in a nearly $7 billion addressable North American defense market that is expected to grow at a high-single digit CAGR through 2028, and nearly 70% of its positions are sole or primary source. With its proprietary engineering and manufacturing capabilities, existing positions on coveted platforms and long-standing relationships with leading customers, kSARIA is well-positioned to benefit from global defense build-up, including investments in new platforms, electronic system upgrades and soldier modernization.

Headquartered in Hudson, New Hampshire, kSARIA has approximately 1,000 employees across six manufacturing sites in North America. It generated approximately $175 million in sales in 2023. kSARIA is now part of ITT’s Connect & Control Technologies segment, a producer of harsh environment connectors and control components used in critical aerospace, defense and industrial applications.

About ITT

ITT is a diversified leading manufacturer of highly engineered critical components and customized technology solutions for the transportation, industrial, and energy markets. Building on its heritage of innovation, ITT partners with its customers to deliver enduring solutions to the key industries that underpin our modern way of life. ITT is headquartered in Stamford, Connecticut, with employees in more than 35 countries and sales in approximately 125 countries. For more information, visit www.itt.com.

ITT-O

View source version on businesswire.com: https://www.businesswire.com/news/home/20240912012984/en/

Media:

Phil Terrigno

+1 914-641-2143

phil.terrigno@itt.com



Investors:

Mark Macaluso

+1 914-641-2064

mark.macaluso@itt.com

Source: ITT Inc.

FAQ

What is the value of ITT's acquisition of kSARIA?

While the exact acquisition value isn't disclosed, ITT is funding the acquisition through a combination of a ~$460 million term loan and cash on hand.

How much revenue did kSARIA generate in 2023?

kSARIA generated approximately $175 million in sales in 2023.

What is the size of the market kSARIA operates in?

kSARIA operates in a nearly $7 billion addressable North American defense market.

How many employees does kSARIA have and where are they located?

kSARIA has approximately 1,000 employees across six manufacturing sites in North America.

What segment of ITT will kSARIA be integrated into?

kSARIA will be integrated into ITT's Connect & Control Technologies segment.