Wärtsilä Corporation is to acquire L-3 Marine Systems International from NYSE-listed L-3 Communications Holdings Inc. L-3 Marine Systems International (L-3 MSI) is a business sector within L-3’s Electronic Systems business segment primarily focused on the commercial ship industry. The transaction is valued at MEUR 285 (enterprise value), subject to customary adjustments including an estimated reduction of MEUR 60 for L-3 MSI employee pension-related liabilities to be assumed by Wärtsilä Corporation. Financing for the deal will be from existing cash resources and credit facilities. The acquisition is subject to clearance from the regulatory authorities. The acquisition is expected to be closed during the second quarter of 2015.
L-3 MSI is expected to generate approximately MEUR 400 of sales with an operating margin of approximately 6.5 % for the year ending 31 December 2014. Headquartered in Hamburg, Germany, L-3 MSI currently has more than 1,700 employees in 38 locations in 14 countries. The company is well regarded internationally for its technology and systems integration capabilities. L-3 MSI delivers automation, navigation and electrical systems, as well as dynamic positioning technology, and sonar and underwater communications technology for the marine, naval and offshore markets. It has a leading position in the cruise & ferry and large container vessel markets. L-3 MSI’s portfolio comprises various product brands, including SAM Electronics, L-3 Valmarine, Lyngsø Marine, L-3 Dynamic Positioning & Control Systems, Jovyatlas Euroatlas, L-3 Elac Nautik, Funa and APSS.
The operation of vessels is becoming ever more sophisticated and the number of ships with electric propulsion is increasing. This trend is expected to continue because of the growing needs for flexibility, compliance with environmental regulations, and higher operational efficiency. Wärtsilä has a strong position in all of these areas, which will be further strengthened by its acquisition of L-3 MSI. L-3 MSI has extensive experience in supplying a variety of vessel and offshore installation types. Combining this strength with Wärtsilä’s engines, propulsion equipment, environmental offering, gas fuel solutions, and electrical & automation systems creates a unique offering that is unmatched by the competition. Both shipyards and owners serving the marine and offshore oil & gas sectors will benefit from this alliance.
In announcing the acquisition agreement, Mr Jaakko Eskola, Senior Executive Vice President & President, Ship Power, Wärtsilä Corporation commented: “By combining forces with L-3 MSI, we create a powerful electrical and automation business, which is unique in its sector competence and breadth of capabilities. The deal is fully in line with our growth strategy to become the leading provider of innovative products and integrated solutions in the marine and oil & gas industries. This enables us to have a dedicated focus on both markets with an industry leading portfolio that features solutions from both companies.”
Wärtsilä foresees that the new unit will be able to capture new market opportunities and improve operational efficiency for its customers, thereby increasing both the sales and profitability of the business. The acquisition is expected to be EPS accretive as of 2015.
ANALYST AND PRESS CONFERENCE AT 15.00 EET
An analyst and press conference will be held on Tuesday 16 December 2014 at 15.00 Finnish time, at the Wärtsilä headquarters in Helsinki, Finland. The combined web- and teleconference will be held in English and can be viewed at the following address:
To participate in the teleconference please register at the following address: http://emea.directeventreg.com/registration/47536672. You will receive dial-in details by e-mail once you have registered. If problems occur, please press *0 for operator assistance. Please use *6 to mute your phone during the teleconference and the same code to unmute.
An on-demand version of the webcast will be available on the company website later the same day.
Senior Executive Vice President & President, Ship Power
+358 10 709 5623
Executive Vice President, Communications & Branding
Tel. +358 10 709 5599
For investor information, please contact:
Director, Investor Relations
Tel: +358 10 709 5637
Wärtsilä in brief:
Wärtsilä is a global leader in complete lifecycle power solutions for the marine and energy markets. By emphasising technological innovation and total efficiency, Wärtsilä maximizes the environmental and economic performance of the vessels and power plants of its customers.
In 2013, Wärtsilä's net sales totalled EUR 4.7 billion with approximately 18,700 employees. The company has operations in more than 200 locations in nearly 70 countries around the world. Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland.
L-3 MSI in brief:
Headquartered in Hamburg, Germany, L-3 Marine Systems International (L-3 MSI) is a sector within L-3’s Electronic Systems business segment. L-3 MSI is a turnkey supplier of complete electrical systems, as well as integrated navigation, automation, communications, energy distribution and propulsion systems for all types of ships. L-3 MSI has 1,700 employees in 38 locations and 14 countries. L-3 MSI is expected to generate approximately MEUR 400 of sales with an operating margin of approximately 6.5 % for the year ending 31 December 2014. L-3 MSI is part of the Marine & Power Systems Division of NYSE-listed L-3 Communications Holdings Inc.
Headquartered in New York City, L-3 Communications Holdings Inc employs approximately 48,000 people worldwide and is a prime contractor in aerospace systems and national security solutions. L-3 is also a leading provider of a broad range of communication and electronic systems and products used on military and commercial platforms. The company reported 2013 sales of $12.6 billion. To learn more about L-3, please visit the company’s website at www.L-3com.com.
Presentation material: Acquisition of L-3 Marine Systems International (pdf)