Vertical markets, Mergers and Acquisitions, Mergers and Acquisitions, Content

Government Shipbuilder HII Acquires Two IT Service Providers, Cybersecurity Firms

Huntington Ingalls Industries (HII), America's largest military shipbuilding company, is setting sail for the government IT services market. Indeed, HII has acquired two IT services providers with cybersecurity expertise in recent weeks. The deals include Fulcrum IT Services and G2 Inc. Financial terms for the deals were not disclosed.

Huntington Ingalls Industries spun off from Northrop Grumman in 2011. HII's revenues were $7.4 billion in 2017 -- mostly from that shipbuilding business.

But take a closer look and you'll notice that HII is building out its Technical Solutions division -- a $1 billion or so organization that's expanding organically and through acquisition.

The Fulcrum and G2 acquisitions will potentially lift HII's annual Technical Solutions revenues by $100 million to $200 million, sources tell ChannelE2E.

Why HII Acquired Fulcrum IT Services and G2 Inc.

The latest M&A deals involve:

1. Fulcrum IT Services, an IT and government consulting company in Centreville, Virginia. The planned acquisition is expected to close in February, HII disclosed in recent days. Fulcrum's expertise includes predictive threat analytics, cybersecurity, software development, big data engineering, and more.

Fulcrum, founded in 1985, reached $90.6 million in revenue for 2017 -- a three-year growth rate of 70 percent, according to the 2018 Inc. 5000 report. The company had roughly 343 employees at the close of 2017, that report states. ChannelE2E could not find more recent financial and staffing information for the company.

Andy Green
HII Executive VP Andy Green
Mike Peters

Describing the acquisition, Andy Green, executive VP of HII and president of Technical Solutions said:

“Fulcrum’s capabilities in software development, data analytics, cyber security and advanced engineering are strongly aligned with national security priorities and complement our priority practice areas. The company’s unique experience and capabilities across the C5ISR domain grow our reach and support in the intelligence and special operations communities.”

2. G2 Inc., a cybersecurity solutions and services company in Annapolis Junction, Maryland. The company's expertise includes national cyber defense, computer network exploitation, cyber analytics and the distributed analytic platform, HII said.

Describing that deal, HII President and CEO Mike Petters noted:

“The acquisition of G2 adds advanced cybersecurity capabilities to our portfolio and supports our strategy to expand our professional services business. G2 has unique cyber experience that will enhance our information assurance offerings and operations. We are pleased to welcome G2 to the HII family.”

HII Technical Solutions: $1 Billion and Growing?

Quick math suggests HII's Technical Solutions business produced roughly $1 billion in annual revenues ahead of the M&A deals.

In HII's third quarter of 2018, Technical Solutions revenues were $245 million, up $4 million from the same period in 2017, primarily due to higher oil and gas services and mission driven innovative solutions revenues, partially offset by lower fleet support and nuclear and environmental revenues, the company said.

Mergers and Acquisitions: Government IT Service Providers

M&A activity involving government IT service providers has been steady, with numerous first-time buyers jumping into the market. Recent deals ChannelE2E has tracked include:

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.