Ultra Electronics Holdings plc and Sparton Corporation, the two companies in charge of manufacturing sonobuoys for the US Navy, walked away from their merger after the US Department of Justice (DOJ) expressed its concern over the matter.
As reasoned by the DOJ, the merger – originally valued at more than $234 million – threatened to permanently combine the only two qualified suppliers of sonobuoys to the U.S. Navy.
Ultra Electronics and Sparton Corporation have in recent years supplied this critical equipment to the US Navy through their joint venture, ERAPSCO.
During the review of the proposed merger by the DOJ, the US Navy expressed the view that instead of the parties proceeding with the merger, each of Sparton and Ultra should enhance its ability to independently develop, produce and sell sonobuoys and over time work toward the elimination of their use of Sparton’s and Ultra’s ERAPSCO joint venture for such activities.
In a statement on March 5, Sparton said it anticipates that the navy will assist in funding Sparton’s transition to independently developing, producing and selling sonobuoys.
Sonobuoys are used in support of multiple underwater missions for detection, classification, and localization of adversary submarines during peacetime and combat operations.
Ultra Electronics Holdings Inc. is a British company headquartered in London, England, that is comprised of 19 separate businesses. Ultra Electronics’ core markets are in North America and the United Kingdom. In 2016, Ultra reported annual worldwide revenues of £785.8. Ultra Electronics provides a wide range of products to the defense, aerospace, security, transport and energy industries.
Sparton Corporation is a publicly-held company incorporated in Ohio and headquartered in Schaumberg, Illinois; it reported $397.6 million in net sales for the fiscal year 2017. Sparton primarily designs and builds electromechanical devices for medical, military, aerospace and industrial applications. Sparton currently has thirteen manufacturing locations and engineering design centers worldwide.