Teledyne buying FLIR to create unmanned and sensor heavyweight

Cabatli_TR · Jan 5, 2021

WASHINGTON ― Industrial conglomerate Teledyne Technologies Inc. is acquiring FLIR Systems Inc., the sensor and unmanned systems maker, in a cash-and-stock transaction valued at about $8 billion.

The deal is seen as creating a larger new contender for unmanned systems in the air, land and sea ― or for optionally manned systems, as well as nascent Defense Department satellites to detect and track hypersonic missiles.

“At the core of both our companies is proprietary sensor technologies. Our business models are also similar: We each provide sensors, cameras and sensor systems to our customers,” Teledyne Executive Chairman Robert Mehrabian said in a statement Monday. “However, our technologies and products are uniquely complementary with minimal overlap, having imaging sensors based on different semiconductor technologies for different wavelengths.”

The deal is expected to close in the middle of this year, pending regulatory approvals.

Cowen analyst Roman Schweizer said in a note to investors that it’s unclear how regulators under the incoming Biden administration will regard the pending merger, but he speculated DoD could favor the creation of a “healthy midtier competitor” for larger defense firms. Businesswise, the combined company provides better positioning in growing areas of the Pentagon’s budget: advanced sensors and unmanned systems.

“While DoD’s budget may be flat to even down over the next five years, we think these two important segments will be net winners and could see growth,” Schweizer said.

Teledyne’s strong products in space-based infrared sensors and undersea unmanned vehicles should mesh well, Schweizer said, with FLIR’s airborne and ground infrared sensors and its unmanned platforms, through FLIR’s acquisitions of Endeavor and Aeryon in 2019.