Teledyne to Acquire Select Aerospace and Defense Electronics Businesses of Excelitas

Rhea-AI Summary

Teledyne Technologies (NYSE:TDY) has announced an agreement to acquire select aerospace and defense electronics businesses from Excelitas Technologies for $710 million in cash. The acquisition includes the Optical Systems business (Qioptiq® brand) in Northern Wales, which provides advanced optics for military displays and night vision systems, and the U.S.-based Advanced Electronic Systems business, which produces electronic devices for defense and space applications. The transaction is expected to complete in early 2025 and be accretive to both GAAP and non-GAAP earnings per share.

Positive

• Acquisition price of $710 million in cash shows strong financial position
• Expected to be accretive to both GAAP and non-GAAP earnings per share
• Expands product portfolio in complementary markets without internal competition
• Strengthens presence in defense and aerospace electronics segment

Negative

• Large cash outlay of $710 million may impact short-term liquidity
• Regulatory approval requirements could delay closing until 2025
• Integration risks associated with international operations

Insights

M&A Analyst

This $710 million acquisition represents a strategic expansion of Teledyne's aerospace and defense electronics segment. The deal brings valuable technological capabilities in advanced optics and electronic systems, particularly strengthening Teledyne's position in defense and space applications. The acquisition targets complement Teledyne's existing portfolio without overlap, suggesting efficient market expansion and potential operational synergies.

The transaction value appears reasonable given the specialized nature of the acquired technologies and their applications in high-value defense and space markets. The deal's structure as an all-cash transaction indicates Teledyne's strong financial position. Management's expectation of GAAP and non-GAAP earnings accretion suggests confident projections for value creation, though the extended closing timeline to early 2025 reflects the complex regulatory approval process typical in defense-related acquisitions.

Defense Industry Analyst

The acquisition significantly enhances Teledyne's defense electronics capabilities, particularly in critical areas like night vision systems, heads-up displays and electronic safe & arm devices. These technologies are essential for modern military platforms and align with increasing defense modernization trends globally. The Qioptiq brand brings established relationships in the European defense market, while the AES business strengthens Teledyne's U.S. defense presence.

The timing is strategic, as defense spending continues to rise globally, driven by geopolitical tensions and military modernization programs. The combination of Qioptiq's optical expertise with Teledyne's existing capabilities could create compelling integrated solutions for next-generation military systems.

THOUSAND OAKS, Calif.--(BUSINESS WIRE)-- Teledyne Technologies Incorporated (NYSE:TDY) (“Teledyne”) announced today that it has entered into an agreement to acquire select aerospace and defense electronics businesses from Excelitas Technologies Corp. (“Excelitas”) for $710 million in cash. The acquisition includes the Optical Systems (OS) business known under the Qioptiq® brand based in Northern Wales, UK, as well as the U.S.-based Advanced Electronic Systems (AES) business.

The UK-based OS business provides advanced optics for heads-up and helmet-mounted displays, dismounted tactical night vision systems and proprietary glass used in space and satellite applications. In the U.S., the AES business provides custom energetics, including electronic safe & arm devices, high-voltage semiconductor switches and rubidium frequency standards for defense and space applications.

“We are excited to announce this pending acquisition, which will bring us new technology in markets well-understood by Teledyne. Our respective products are highly complementary and not competitive, and we generally serve customers in complementary geographies,” said Robert Mehrabian, Executive Chairman. “We look forward to welcoming these businesses and their employees to Teledyne.”

“We will be pleased to add these businesses to our aerospace and defense electronics segment, which has performed exceptionally well in recent years,” said George Bobb, President and Chief Operating Officer. “Furthermore, we believe the businesses’ operations, personnel and culture are very compatible with our U.S. and UK defense electronics organizations.”

“We are excited about the new opportunities this acquisition will bring and look forward to a seamless integration that will benefit our customers, employees and Teledyne stakeholders,” said Doug Benner, EVP Excelitas and President Defense and Aerospace Segment. “Our journey providing electro-optical solutions designed to keep troops and high-value assets safe continues with an industry leader.”

The transaction is anticipated to be completed in early 2025 and is subject to customary closing conditions, including regulatory approvals. Teledyne management expects the transaction to be accretive to GAAP and non-GAAP earnings per share, excluding transaction costs.

Evercore and Harris Williams are acting as financial advisors, and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to Excelitas in connection with the transaction. McGuireWoods LLP is acting as legal advisor to Teledyne.

About Teledyne

Teledyne is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems. Teledyne’s operations are primarily located in the United States, Canada, the United Kingdom, and Western and Northern Europe. For more information, visit Teledyne’s website at www.teledyne.com.

About Excelitas

Excelitas is the leading provider of advanced, life-enriching technologies that make a difference, serving global market leaders in the life sciences, advanced industrial, next-generation semiconductor, aerospace, and defense end markets. Headquartered in Pittsburgh, Pennsylvania, Excelitas is an essential partner in the design, development, and manufacture of advanced technologies, offering leading-edge innovation in sensing, detection, imaging, optics, and specialty illumination for customers worldwide. Excelitas is at the forefront of addressing many of the relevant megatrends impacting the world today, including precision medicine, industrial automation, artificial intelligence, connected devices (IoT), and military modernization.

Forward-Looking Statements Cautionary Notice

This press release contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, relating to a potential acquisition of a business. Actual results could differ materially from these forward-looking statements. Many factors, including the ability of Teledyne and the acquired businesses to achieve anticipated synergies and Teledyne’s ability to integrate the acquired businesses, the ability of the parties to satisfy closing conditions, as well as market and economic conditions beyond Teledyne’s control, could change anticipated results. There are additional risks associated with operating businesses internationally, including those arising from United States and foreign government policy and regulatory changes or actions and exchange rate fluctuations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241106474084/en/

Jason VanWees

(805) 373-4542

Source: Teledyne Technologies Incorporated

FAQ

How much is Teledyne (TDY) paying for the Excelitas businesses acquisition?

Teledyne (TDY) is paying $710 million in cash for the select aerospace and defense electronics businesses from Excelitas.

When will Teledyne (TDY) complete the Excelitas businesses acquisition?

The transaction is anticipated to be completed in early 2025, subject to customary closing conditions and regulatory approvals.

What businesses is Teledyne (TDY) acquiring from Excelitas?

Teledyne is acquiring the Optical Systems (Qioptiq) business in Northern Wales and the U.S.-based Advanced Electronic Systems business from Excelitas.

Will the Excelitas acquisition be accretive to Teledyne's (TDY) earnings?

Yes, Teledyne management expects the transaction to be accretive to both GAAP and non-GAAP earnings per share, excluding transaction costs.