By Marjorie Censer
Published: 10 July 2011
Seeking to grow its North American business, Swedish defense company Saab AB is doubling its D.C. staff and has purchased an East Syracuse-based air traffic management and surveillance firm.
Saab — which sold off the automobile business of the same name in 2000 — expects to increase its North American office, which is based in the District, from about 15 employees to at least 30 in the next six months, said Dan Enstedt, president of Saab North America.
It will primarily add business development and sales staff as it looks to beef up its U.S. and Canadian presence through both organic growth and acquisitions.
Late last month, Saab agreed to pay $155 million for Sensis, a 600-employee company known for its work in air traffic management and in sensors and radars. Saab could pay up to an additional $40 million depending on the success of the business. The deal requires approval from U.S. antitrust authorities, but Enstedt said he expects it to close by September.
Sensis, which has locations in Reston and the District, will function as a Saab subsidiary. Its estimated revenue hit about $130 million last year.
Despite tightening U.S. budgets, Enstedt said the country still represents a sizable market.
“We’ve been here in the U.S. for a long time, but we really want to grow the business much more,” he said. “To be a successful company here, of course, you need to have a stronger footprint.”
Enstedt said he anticipates that Sensis’s air traffic management and sensor work will both be growing businesses. He noted that Sensis has won work on the United States’ next-generation air traffic management system while Saab is working on a similar program in Europe, meaning the combined company should be able to take on even larger projects.
Additionally, Enstedt said, Saab’s growing U.S. presence will help it build partnerships with companies like Boeing and Northrop Grumman. Saab’s last U.S. acquisition was North Carolina-based Barracuda Technologies in 1999.
The company is not alone, as many other European firms — facing tightened European defense spending — are looking to the United States for growth. Major firms like Cobham of England and Finmeccanica of Italy have made recent U.S. purchases.
“There’s tremendous pressure now on European defense budgets,” said Philip Finnegan, director of corporate analysis at the Teal Group. “Already the expectation is that pressure is going to grow on U.S. defense budgets, but still the size is so much greater that . . . most European defense companies want to expand into the U.S.”
While not ruling out future acquisitions, Enstedt said another one will not happen quickly.