Cohort acquisition creates new defence powerhouse
A new powerhouse in the global defence sector has been created through an Oxbridge alliance after Cohort plc in Oxon agreed to pay an initial £12.5m for MASS Consultants Ltd – an independent defence systems house in St Neots.
Cohort chairman Nick Prest said Cohort intended to use the acquisition as a springboard to international success supplying technical services to the defence market.
“The acquisition will substantially increase the scale of the group and build capabilities into new but related areas,” he said. “MASS is an excellent fit with our existing business and should offer significant opportunities for future growth.”
The deal creates a platform to bid for larger contracts and enhances the group’s ability to cross-sell its services into different areas of defence. The deal price will swell through further deferred payments of up to £0.5m subject to MASS winning two substantial overseas contracts within 24 months after completion of the deal – scheduled for August 1.
Cambridge based international law firm Eversheds advised AIM-listed Cohort on the acquisition and an associated £8.8m placing of 6.55 million shares on AIM.
Cohort’s operating subsidiary is Systems Consultants Services Ltd, a leading independent defence technical services provider while MASS delivers systems engineering as well as software and electronic engineering services and solutions to government and industry.
MASS has a particular strength in the provision of managed services for secure IT systems. Its major customer is the UK Ministry of Defence, which accounted for 71 per cent of turnover in the year ended March 31.
Owned by the Silicon Valley Group, MASS has an annual turnover of circa £12m and employs 120 staff of which 80 per cent are professional engineers with first degrees. These are complemented by a cadre of ex-service personnel who provide essential domain knowledge in specific areas.
In 2000, MASS won a 10-year £43m contract to support a highly secure MoD Comp-uter Centre. It has also recently won a five-year extension contract valued at £6.5m to continue its specialist support services to the UK’s Air Warfare Centre in Lincoln.
The scope of its work includes tactics and countermeasures development. In electronic warfare, MASS also provides independent advice, training, data support and data management tools and is a contractor in the provision of EW operational support services. It has established a secure installation in Lincoln from which these services are delivered to both UK and export customers.
MASS was awarded a three-year, £9m contract in March to develop, integrate and support an improved communications and radio management capability on one of the UK’s leading ISTAR platforms. The company’s substantial order book currently stands at around £34m.
Cohort stated in March on its AIM float its intention to build an independent group in defence technical services, partly through acquisition.
Cohort’s sole initial trading subsidiary, Systems Cons-ultants Services Ltd, provides a range of technical services to clients in the defence and security sectors, its principal client being the UK MOD and its agencies. Its other clients include other UK government departments, NATO, major defence contractors and non-defence businesses.
SCS was founded in 1992 by Stanley Carter, formerly a colonel in the British Army, and now turns over around £15m.