Given the sensitive nature of the technologies involved at both companies, bankers expect intense antitrust scrutiny by U.S authorities.
According to sources familiar with the matter at hand, New York-based private equity firm Veritas Capital is exploring the divestiture of two of its high-tech portfolio companies which have a combined worth of around $3 billion.
This potential sales of Excelitas Technologies Corp, an electronic component manufacturer and Anaren Inc, which manufactures radar components, is likely to significantly boost the U.S. aerospace and defense M&A landscape, which has seen just $1 billion worth of deals so far. This marks a 46% drop in M&A in comparison to the previous year, for the same period.
According to sources, Veritas hired Goldman Sachs to pursue a dual track sale process for Excelitas which could see the company being either sold outright or through an IPO.
In the event of a successful sale, Excelitas could fetch as much as $2 billion, said sources.
Veritas has investments in several national security and tech-sector assets. In a separate deal, it’s sale of Anaren could fetch it more than $800 million, said sources.
When asked to respond to requests for comments, both Veritas and Goldman Sachs, declined to comment. Excelitas and Anaren did not immediately respond to a request for comment.
Sources preferred the cover of anonymity since they were not authorized to discuss the matter with the media.
While Excelitas makes LED and flash lamps that are used across sectors ranging from medical lighting to aerospace and defense equipments, Anaren produces microwave components for wireless, space and defense electronics providers including Northrop Grumman Corp, Raytheon Co, and Lockheed Martin Corp.
Veritas’ microwave assemblies are used by the U.S. in its Long Range Discrimination Radar (LRDR) systems that the U.S. military uses to track ICBMs.
Under the Trump Administration, deals in the aerospace and defense industry have slowed down considerably sending asset prices sky high, forcing many buyers to postpone their deals.
Bucking this trend is the potential $20-plus billion merger of United Technologies Corp and Rockwell Collins Inc.
Although this barren landscape could bode well for Veritas, however given the sensitive nature of the technology involved, it is likely that it will invite intense U.S. regulatory scrutiny, said bankers.