Leonardo DRS' first acquisition marks next phase of company's growth

Under the terms of the agreement announced Wednesday, Leonardo is acquiring Daylight through its U.S. subsidiary, Leonardo DRS. It will maintain its current management team and location in San Diego, said Daylight President Paul Larson in an interview. It plans to grow to up to 175 workers this year.

The company was founded by Larson and Chairman/Chief Executive Timothy Day. It makes semiconductor lasers in the mid-infrared light range, beyond what humans can see.

In previous interviews, Day has described the Daylight’s technology as “the color of heat” or “the color snakes can see.”

“Together with the added strength of the people and resources of Leonardo DRS, the mission of Daylight Solutions, ‘To Protect With Light’, will be more fully realized and will enhance our proven ability to transition new technologies into commercial products for a wide range of industries,” said Day in a statement.

Daylight’s defense business is expected to grow significantly in the coming years, thanks to the rollout of new U.S. military aircraft counter-measure systems.

Its infrared lasers are mounted on aircraft and aimed at approaching missiles, blinding and confusing a variety of weapons systems such as shoulder-fired missiles, which pose significant threats to both military and civilian aircraft.

Daylight is a subcontractor to Northrup Grumman on a contract to protect U.S. Army helicopters from heat-seeking missiles. In addition, it won a contract to supply U.S Navy helicopters with similar lasers, said Larson.

Leonardo DRS said it valued Daylight at nine times estimated earnings in 2017 before interest, taxes, depreciation and amortization. The acquisition is subject to closing conditions, including regulatory approval from the Committee on Foreign Investment in the U.S.

Leonardo DRS makes electro-optical and infrared sensors, so there is little product overlap with Daylight’s lasers, said Larson.

“They are very complementary businesses,” he said. “That was part of the appeal. We have a lot ideas of things we can start working on together, and they have ideas as well.”

Leonardo SpA is based in Rome and publicly traded in Milan. It purchased U.S. based DRS Technologies in 2008 for $5.2 billion.

“With this acquisition, Leonardo DRS reinforces its commitment to remain at the forefront of infrared technology to not only protect our men and women in uniform but also to perform critical tasks across a range of industries,” said Bill Lynn, chief executive of Leonardo DRS, in a statement.