Mercury Systems is buying a supplier of microwave components with applications in everything from satellite communications to missile guidance systems. Its $40.5 million deal for Delta Microwave comes after President Trump's budget blueprint for next year proposed a defense spending hike.
Mercury said that Delta's power amplifiers and filters will complement its wide array of defense electronics, which it sells in modular blocks for applications like electronic warfare, radar systems, and munitions. The company spent around four times Delta's 2016 revenue of $12.8 million.
“Delta Microwave is an excellent fit,” said Mark Aslett, Mercury’s chief executive, in a statement. “Their strengths in high-power, high-frequency active and passive microwave components and subassemblies – particularly in GaN solid-state power amplifiers – are driving strong backlog and growth.”
The deal's timing could also be auspicious. President Trump's proposed budget is seeking $639 million in defense spending next year, up $52 billion from this year. That would reverse the trend of the Obama administration, which made cuts to the defense budget starting in 2011 after spending increased sharply over the previous decade.
Delta has sold parts for Lockheed Martin’s F-35 and Boeing’s Rivet Joint aircraft, as well as Raytheon’s guided Paveway bombs and MALD decoy missiles. The 36-year-old Mercury has contributed to over 300 military programs, according to its website, including the Patriot missile defense system and Predator drone.
The acquisition is Mercury's third in the last year. Those include a $300 million deal for the embedded security, RF and microwave, and custom microelectronics businesses of Microsemi. The company also recently bought military embedded computing firm Creative Electronic Systems for $38 million.