Leidos Moves to Buy Gibbs & Cox in $380M Deal
Defense contractor Leidos is making a bid to buy the almost hundred-year-old ship design firm Gibbs & Cox in a $380 million deal, the company announced in a Tuesday earnings call.
The cash deal, expected to close in the second quarter of 2021, would position Leidos to compete in the emerging unmanned naval systems market that is underpinning much of the Navy’s strategic focus.
“The acquisition of Gibbs & Cox will extend our existing maritime business and add specific capabilities and services, such as naval architecture and marine engineering, 3D modeling and design and… engineering to the solution set that we offer to our customers,” Leidos CEO Roger Krone said during the earnings call.
“We’re very excited about how Gibbs & Cox brings their capability around the design of the ship and the ship systems. And we bring, if you will, the mission equipment. And we’re really excited about how that will fuel growth for our maritime business going forward.”
Leidos has been involved in some of the Navy’s earliest forays into unmanned surface systems and was the prime contractor in developing the Sea Hunter unmanned surface vehicle for DARPA that is transitioning to the Navy. Leidos in July lost to Sea Hunter subcontractor L3Harris in a bid to develop the Navy’s follow-on medium unmanned surface vehicle (MUSV).
“We’ve learned a lot about autonomy and the Navy business and in our MUSV program, I think we had a very, very competitive bid, but we didn’t win. And as good as we were about the mission equipment on the autonomy, I think there were things that we learned in naval architecture and ship design,” Krone said.
Gibbs & Cox has designed the former Oliver Hazard Perry-class frigate, the Arleigh Burke-class of guided-missile destroyers and the Freedom-class Littoral Combat Ship. It’s also modifying the design of the FREMM frigate for the Navy’s Constellation-class, which Fincantieri Marinette Marine is building.
In September, Gibbs & Cox was one of six companies to win a $7 million design contract to develop a concept for the Navy’s Large Unmanned Surface Vessels.
As part of the deal, Leidos is expected to keep Gibbs & Cox’s brand identity and operate as a wholly-owned subsidiary.
“We can augment [Gibbs & Cox] with thousands of system engineers and pieces of engineering tools, digital engineering tools, a larger, stable balance sheet that can help invest in business development, technical report resources,” Leidos Defense Group president Gerry Fasano said in an interview Tuesday with Defense One.