Proposed Acquisition of Avantus Federal LLC: delivering our global strategy


QinetiQ Group plc (“QinetiQ” or the “Company”) announces that its wholly-owned subsidiary QinetiQ Inc. has entered into an agreement to acquire Avantus Federal LLC (“Avantus”) from NewSpring Holdings, for an enterprise value of $590 million (£483 million1) (the “Acquisition”). The Acquisition will generate a tax benefit for QinetiQ of approximately $70 million2. The closing of the Acquisition is subject to customary conditions, including regulatory approvals and is expected to close by end of calendar year 2022.

Avantus is a leading provider of mission-focused cyber, data analytics and software development solutions to the US Department of Defense, Intelligence Community, Department of Homeland Security and other Federal civilian agencies. Avantus has a strong track record of achieving speed-to-mission impact. In the 12 months to 30 June 20223 (“LTM”), Avantus generated revenues of $298 million, adjusted EBITDA of $35.5 million and adjusted operating profit of $32 million. This results in a LTM purchase price multiple of 14.6x EBITDA to EV after adjusting for the tax asset acquired. Over the last three years, Avantus has demonstrated a strong track record of consistent double-digit revenue growth on a proforma organic basis, at attractive margins.


  • Market leading mission-focused cyber, data analytics and software development solutions provider for US defense, intelligence and homeland security customers
    • Strengthens our capabilities in Cyber, Information Solutions, Mission Services and National Security
    • Expands our customer portfolio in Department of Defense and into National Security, Homeland Security and Federal Civilian customers
  • Strong cultural fit; management and talented employee base augments strengthened US leadership team
    • Deepens US management expertise and bench strength
    • Strengthens our workforce particularly in technical, data analysis, advisory and program management skills
  • Transforms our US business to create a platform to accelerate growth in high priority segments aligned with US national security mission
    • Grows Group revenue by c.25% and doubles the size of our US business
    • Creates a disruptive mid-tier US business that accelerates growth through complementary capabilities
  • Strategically aligned to build on our six distinctive offerings, extends our customer base and increase breadth and scale within the US

- Particularly in the areas of Engineering Services and Support, Cyber and Information Advantage, Test and Evaluation, and Training and Mission Rehearsal

- Provides further opportunity for global leverage

  • Highly attractive business with significant orders visibility and 10%+ forward revenue growth with stable double-digit margins
    • Attractive double-digit revenue growth and operating margins consistent with Group guidance
    • Multi-year visibility on existing contracts underpins medium term growth outlook with strong pipeline of new opportunities, with a qualified order pipeline for the next 5 years of $2.4bn
  • Compelling business case with enhanced shareholder returns and an effective use of our strong balance sheet
    • Immediately earnings accretive with double-digit EPS growth by end of first full year after completion
    • ROIC to exceed WACC by end of third full year after completion
    • Acquisition to be financed through combination of existing cash and new debt facilities
    • Leverage of approximately 1.3x Net Debt / EBITDA expected at completion
    • Targeting rapid deleveraging to less than 1.0x by end of first full year after completion

Commenting on today’s announcement, Steve Wadey, Group Chief Executive Officer of QinetiQ, said:

"This acquisition is an important step in the execution of QinetiQ’s five-year ambitions to expand our presence in the US, the largest security and defence market in the world. Avantus significantly enhances our US offering and provides a strong platform from which to further grow our US operations. Avantus has a track record of high growth at attractive margins and is well-positioned across priority areas for key defence and intelligence customers in the US. We have a high confidence plan to integrate Avantus in order to deliver our global growth strategy.

Avantus’ highly integrated business, core capabilities and customer relationships complement QinetiQ’s distinctive offerings, allowing us to grow the services and solutions that benefit our combined global customers as their needs evolve at an accelerating pace. The combination of QinetiQ and Avantus will create a leading defence and intelligence business delivering mission-led, disruptive innovation to customers across the US, UK, Australia and other Five Eyes nations. I am confident that our shared cultures and values, focus on innovation and development, and passion for delivering for our customers, will prove a winning combination. This transaction also deploys our strong balance sheet to drive growth and enhance returns to shareholders.

Recent world events have reinforced the long-term needs of our customers and with a significantly enhanced offering and continued focus on disciplined execution of our strategy I am confident we are better placed than ever to deliver for all our stakeholders.”

Analyst and investor presentation

QinetiQ will host a meeting for the Company’s analysts and investors at 08:00 BST on Monday 08/08/2022. Details of how to register to attend can be found here

For Q&A, please use the following phone numbers: UK: +44 (0)330 165 4012 / US: +1 646 828 8073. Confirmation Code: 9879995

This announcement and the presentation slides can be found here

A recording of the presentation will be available for replay shortly afterwards.

For further information please contact:

John Haworth, Group Director of Investor Relations: +44 (0) 7920 545841
Lorna Cobbett, Citigate Dewe Rogerson (Media enquiries): +44 (0) 7771 344781

1 FX rate of 1.22 USD: 1 GBP

2 For US tax purposes the transaction creates relief which is anticipated to generate a cash tax benefit with a present value of ~$70m (at our Weighted Average Cost of Capital)

3 On an IFRS basis