Herndon contractor to acquire NG division for $327M

Herndon tech and management contractor Serco Inc. has agreed to acquire Northrop Grumman’s mission training and satellite ground network communications software business (MT&S) for approximately $327 million.

Serco Inc., a wholly owned subsidiary of United Kingdom-based Serco Group, announced the deal Wednesday, which is expected to close in mid-2025.

MT&S provides the U.S. military with advanced mission training services, as well as software that makes satellite ground networks more efficient. It supports programs for the Army, Space Force, Air Force, Navy, Combatant Commands and international partners.

“This acquisition is an important next step in our strategic journey and underscores Serco’s dedication to growth and innovation in mission-critical solutions,” Serco Inc. CEO Tom Watson said in a statement. “The integration of this enhanced portfolio of work will expand our footprint within the defense market.”

The MT&S business’s portfolio of U.S. defense service contracts yields approximately $300 million in annual revenues. Serco expects the acquisition to grow its North America business to more than $2 billion in revenue.

The nearly 1,000 employees of Northrop Grumman’s MT&S business will join Serco, bringing expertise in digital engineering, software development, satellite ground communications software and mission simulation.

MT&S provides simulation-based training and mission rehearsal capabilities through live, virtual and constructive immersive environments. It owns and develops the Distributed Mission Operations Network, which allows aircrews in different locations to train together in a virtual environment.

The business also gives Serco space operations and services capabilities.

“We have approximately doubled revenue and more than trebled profit in Serco’s North America business in recent years through a successful combination of organic growth and strategic acquisitions. MT&S provides an excellent opportunity to continue that success,” Serco Group CEO Mark Irwin said in a statement.

Serco reported 1.36 billion pounds — equivalent to approximately $1.7 billion as of Thursday — in 2023 revenue for North America. Its parent company, Serco Group, reported 4.87 billion pounds — about $6 billion — in 2023 revenue. Serco Group has more than 50,000 employees in more than 20 countries, about 9,000 of whom are employed in the Americas.