LONDON: Serco Inc., a subsidiary of Serco Group plc, has announced its agreement to acquire Northrop Grumman’s mission training and satellite ground network communications software business (MT&S) for $327 million in cash.

The acquisition aims to enhance Serco’s scale, capabilities, and growth potential in the U.S. defense market, supporting programs across the U.S. Army, Space Force, Air Force, Navy, Combatant Commands, and international partners.

MT&S will boost Serco’s North American revenue to over $2 billion and profit to $200 million. The deal, expected to be completed in mid-2025 pending regulatory approvals, will add nearly 1,000 new colleagues to Serco’s workforce.

Mark Irwin, Serco Group Chief Executive, commented, “We have approximately doubled revenue and more than trebled profit in Serco’s North America business in recent years. MT&S provides an excellent opportunity to continue that success.”

MT&S is projected to generate $300 million in revenue and $34 million in operating profit in 2025, with an 11% profit margin. The acquisition is expected to be accretive to underlying earnings per share by mid-single digits in 2026.

Serco’s largest sector post-acquisition will be defense, representing approximately 40% of Group revenue, with North America accounting for about 50% of Group underlying operating profit. The addition of MT&S’s capabilities in technology-enabled military training and satellite ground network software services will provide significant growth opportunities for Serco.

MT&S’s technology-enabled training services ensure mission readiness through advanced simulation-based training and mission rehearsal capabilities. The business also owns the Distributed Mission Operations Network (DMON), delivering secure connectivity and network interoperability for aircrews worldwide.