Elbit America buys sonobuoy maker Sparton from Cerberus

WASHINGTON ― The U.S. arm of Israel’s Elbit Systems, Elbit Systems America, 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 America with an independent board so that it can focus on undersea business activities with more sensitivity for U.S. customers, the companies said.

Sparton’s chief executive, Bill Toti, remains president of Sparton De Leon Springs LLC. The proxy board’s members are former Pentagon acquisition officials Kenneth Krieg and Brett Lambert as well as 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. arm 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 an 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.

At the time, the Navy and administration expressed concerns about expanding supplies of sonobuoys, expendable undersea sensors 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.”

The United States’ focus on China is expected to continue to 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.”