- Serco said it has entered into a definitive Asset Purchase Agreement to buy Naval Systems Business Unit, a US defence contractor, for $225m.

In the 12 months to September 2018, NSBU had revenues of $336m, which compares with Serco's North American Defence revenues in 2018 of $453m. NSBU has an order book of around $600m and a new business pipeline of over $2bn.

"The combined business will be a top-tier supplier of services to the US Navy, which has recently announced plans to increase the fleet from 280 to 355 ships by 2034, and we see a long-term and growing demand for the capabilities that the combination of Serco and NSBU will be able to provide," said Chief Executive Rupert Soames.

The company said it was financing the acquisition through a mix of debt and equity which would allow it to maintain leverage well within its target range of 1-2x EBITDA.

It added that it expected the acquisition to be "materially accretive" to current analyst consensus of underlying EPS by 7-9% in 2020, the first full year of ownership.

The acquisition was expected to close in the second half of 2019.

At 9:14am: [LON:SRP] Serco Group PLC share price was +11.65p at 132.75p

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