Parsons to acquire Xator for $400M

Parsons Corp., a Centreville-based federal contractor specializing in technology-focused defense, intelligence, security and infrastructure engineering, has entered into a definitive agreement to acquire Reston-based Xator Corp. for $400 million, the company announced Monday.

Founded in 1944, Parsons is a publicly traded Fortune 1000 corporation with more than 16,000 employees working in 24 nations. It posted $3.6 billion in 2021 revenue. Xator, a privately held federal contractor with more than 900 workers, was co-founded in 2005 by Jerry Pfeiffer and David Scott, who has served as the company’s CEO since 2011. The company is expected to generate approximately $300 million in revenue in 2023.

The acquisition, which is expected to close by June 30, will add to Parsons’ client base the U.S. Department of State, which is expected to be a growth area. Xator will also expand Parsons’ business with the U.S. Special Operations Command, the intelligence community, federal civilian agencies customers and global critical infrastructure markets, according to a news release.

“The addition of Xator is a natural extension of our growth strategy, adding important solutions and technologies that advance global security and protect critical infrastructure during a time of increasing and evolving threats,” said Parsons Chair, President and CEO Carey Smith in a statement. “This acquisition strengthens our position across our two complementary markets and continues our strategy of buying accretive, mission-focused companies aligned with global macroeconomic trends. I look forward to welcoming Xator’s talented team of more than 900 employees to the Parsons family as we collectively create the future.”

The $400 million transaction includes the net present value of a $57 million transaction-related tax benefit, or approximately 10.7 times Xator’s estimated 2023 adjusted EBITDA. Parsons was advised on the deal by Goldman Sachs & Co. LLC and Latham & Watkins LLP. Xator was advised by Rees Broome PC.

Xator addresses critical infrastructure protection, national security and mission training requirements for U.S. government agencies worldwide. It specializes in C4ISR (Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance), national security and intelligence solutions.

“Xator was built on a commitment to the customer’s mission and support for the professional development of our employees. Today we are excited to announce the combination with Parsons — a company that shares our passion for supporting our customers’ mission and is recognized consistently as a top employer,” Scott, Xator’s CEO, said. “The joining of Parsons’ impressive capabilities in infrastructure and national security solutions, along with Xator’s capabilities in infrastructure protection, engineering, C4ISR and national security will be a competitive force in the global infrastructure and national security markets.”