Serco expands U.S. defense footprint in $327Mn acquisition deal

VIRGINIA, UNITED STATES — Serco Inc., the North American division of Serco Group plc, is set to purchase the mission training and satellite ground network communications software business (MT&S) from Northrop Grumman for $327 million in cash.
The acquisition will increase Serco’s presence in the global defense market, mainly in the United States.
Strategic defense market expansion
The acquisition positions Serco for remarkable growth, pushing its North American revenue beyond $2 billion with projected profits of $200 million. The deal will welcome nearly 1,000 new employees to Serco’s workforce, enhancing its technological capabilities in military training and satellite communications.
Serco has agreed to acquire the mission training & satellite ground network comms software business from Northrop Grumman for £264m. The business provides training solutions & ground satellite network software for the US military. #ImpactABetterFuturehttps://t.co/hfdw9VOGpJ
— Serco Group (@SercoGroup) January 30, 2025
Financial impact and growth projections
MT&S is expected to produce around $300 million in revenue and $34 million in underlying operating profit by 2025, with a healthy margin of 11%. The deal will be earnings accretive by mid-single digits in 2026, with strong financials.
“We have approximately doubled revenue and more than trebled profit in Serco’s North America business in recent years through a successful combination of organic growth and strategic acquisitions. MT&S provides an excellent opportunity to continue that success,” said Mark Irwin, Serco Group Chief Executive.
Company profiles and global reach
Serco Group plc, through its subsidiaries, has become a global powerhouse in government services. After this acquisition, defense will be Serco’s largest sector, accounting for about 40% of Group revenue, with North America representing about 50% of the group’s underlying operating profit.
The acquired business brings cutting-edge expertise in simulation-based training and mission rehearsal capabilities. It operates the Distributed Mission Operations Network (DMON), enabling aircrews worldwide to train together in virtual environments. MT&S’s software solutions optimize satellite ground station performance, providing critical communications planning and network monitoring services to military operations.
The transaction, which is expected to be completed in mid-2025, will position Serco for further growth in key markets, including the UK, Australia, and Europe, and enhance its capabilities in the U.S. defense sector, the world’s largest defense market.