Elbit America buys sonobuoy maker Sparton from Cerberus

WASHINGTON ― Israel’s Elbit Systems has completed its $380 million purchase of Sparton, a critical supplier of sonobuoys to the U.S. Navy and allies, from Cerberus Capital Management, the companies announced Tuesday.

Under the deal, Sparton will operate as a subsidiary of Elbit’s American subsidiary, with an independent board so that it can focus on undersea business activities with more sensitivity for American customers, Elbit Systems of America said in its announcement.

Sparton’s chief executive, Bill Toti, was named president of the new Sparton De Leon Springs. The proxy board’s members are former Pentagon acquisition officials Kenneth Krieg and Brett Lambert, and retired Navy Adm. Timothy Keating.

Elbit Systems of America expects to combine Sparton’s technology and products with its own airborne solutions business unit, said Elbit Systems of America’s chief executive, Raanan Horowitz.

“Sparton has been and will continue to be led by a strong and capable management team, and has a good reputation with the U.S. Navy customer. I believe this acquisition will have a positive impact on our growth in both the near and long-term as we continue to invest in Sparton and work to expand its business portfolio and capabilities,” Horowitz said in a statement.

Elbit’s U.S. subsidiary operates under a special security agreement with the Defense Department that allows it to work on certain classified U.S. government programs. Its Aydin displays and stealth divisions will work under its existing security structure.

Cerberus, based in New York City, bought Sparton in 2019 for $138 million and had since turned it into a pure-play defense firm.

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Then, the Navy and prior administration had expressed concerns about expanding its supplies of sonobuoys, an expendable undersea sensor dropped by the hundreds to detect enemy subs. That same year, then-President Donald Trump invoked the Defense Production Act to declare domestic production for the five types of AN/SSQ sonobuoys “essential to the national defense.”

Washington’s focus on China is expected to continue drive demand for sonobuoys. Lawmakers padded the Pentagon’s $264 million request to buy sonobuoys for fiscal 2021 to roughly $300 million in order to meet an unfunded priority identified by the Navy.

“Demand for our undersea warfare products is increasing as a result of a heightened threat environment in both the Indo-Pacific and Atlantic,” Toti said in a statement. “With Elbit Systems of America’s support, we will continue to be well positioned to capitalize on growing opportunities in the undersea environment with our leading technology and distinctive capabilities.”

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