Reuters: Private Equity: UPDATE 1-Kratos to buy drone maker for $155 mln

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UPDATE 1-Kratos to buy drone maker for $155 mln May 8th 2012, 21:07 Tue May 8, 2012 5:07pm EDT May 8 (Reuters) - Kratos Defense & Security Solutions Inc said it will buy privately held drone maker Composite Engineering Inc (CEI) for $155 million in cash and stock. California-based CEI makes aerial target drone systems and composite structures primarily for U.S. defense agencies. Its 2011 revenue was $94 million and adjusted EBITDA was $16 million. Kratos will pay $135 million in cash and $20 million in stock. Its eighth-biggest shareholder Oak Investment Partners will invest $55 million in cash for Kratos' common stock to help fund the transaction. CEI, whose Chief Executive Mike Fournier said he approached Kratos last year to discuss a possible merger, has a current backlog of about $160 million, with a qualified bid pipeline of over $1 billion. New York-based Sagent Advisors served as the exclusive financial adviser for Kratos. Janes Capital Partners advised CEI. Kratos shares closed at $4.77 on Tuesday on the Nasdaq.

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