Huntington Ingalls Industries to acquire Alion in $1.65B deal

Newport News-based Fortune 500 military shipbuilder Huntington Ingalls Industries will acquire McLean-based defense contractor Alion Science and Technology Corp. from Veritas Capital in a $1.65 billion, all-cash deal, HII announced in a news release Tuesday.

The deal is expected to close by the end of this year, with Alion becoming part of HII’s Technical Solutions division. In the release, HII stated that “Alion’s strengths in enabling and supporting Navy simulation and training are closely aligned with existing Huntington Ingalls Industries capabilities and customers,” and include “access in priority growth markets aligned with future U.S. Navy and [Department of Defense] customers.”

Alion is expected to add to HII’s fiscal 2022 revenue by $1.6 billion.

“We established the Technical Solutions division in 2016 with a vision and strategy focused on partnering with our customers to solve their most pressing challenges,” HII President and CEO Mike Petters said in a statement. “Today’s announcement, coupled with our previous investments in leading edge technologies, such as cybersecurity and autonomous systems, reflects our commitment to stay on the cutting edge of critical, high-growth national security solutions and generate significant long-term value for our shareholders.”

Founded in 2002, Alion has been a portfolio company of New York-based private equity firm Veritas Capital since 2015. Alion specializes in providing ISR (intelligence, surveillance, target acquisition, and reconnaissance), military training and simulation, cybersecurity, data analytics and other technology solutions to defense and intelligence community customers. The company has more than 55 offices in the U.S. and more than 25 research labs. The U.S. Navy accounts for about a third of Alion’s annual revenue and the company has a backlog of more than $3 billion, according to HII.

“The combination of Alion and our Technical Solutions business represents a significant value creation opportunity that broadens our capabilities and customer access in our target markets,” said Andy Green, HII executive vice president and president of Technical Solutions. “The experienced Alion team and the highly complementary solutions and products they provide are consistent with the strategic vision we have articulated for the Technical Solutions business, and we are excited about the significant growth potential this combination represents.”

HII is the nation’s largest military shipbuilding company, employing more than 42,000 people worldwide. The company reported 2020 revenue of $9.36 billion. HII’s Newport News Shipbuilding division is the state’s biggest industrial employer, with more than 20,000 workers.

HII’s financial adviser in the transaction was Credit Suisse Group AG, with Jones Day providing legal counsel. Also advising HII on the transaction were Arlington-based business consultant Renaissance Strategic Advisors and Chantilly-based Arena Strategic Advisors LLC. Macquarie Capital Ltd. was Alion’s financial adviser, with Milbank LLP providing legal counsel.