Serco expands defence capabilities with acquisition of QinetiQ’s US business
Serco Inc has agreed to acquire QinetiQ Group plc’s US business for a total cash consideration of $292m, representing a purchase price of $237m for the operating business and a $55m acquired tax benefit. QQUS is a specialised provider of engineering, technology and mission support to the US defence and national security markets. Its capabilities support some of the US Government’s most critical missions, including integrating satellite constellations for secure communications and missile tracking, operating airborne radar surveillance of US borders, and providing robotics and naval control systems.
The acquisition builds on Serco’s US defence platform and follows four defence-focused acquisitions since 2018, most recently, the successful integration of MT&S in 2025. QQUS further increases Serco’s scale and customer access in the world’s largest defence market. It significantly broadens our position with the US Space Force and adds complementary technology, including advanced sensor, imaging and target-recognition systems, as well as control solutions used to launch and recover aircraft from US Navy carriers. These capabilities deepen our position with the US Army and Navy.
Attractive financial profile
In calendar year 2027, Serco expects QQUS to generate revenue of approximately $370m (£276m) and underlying operating profit of $21m (£16m).
Cash consideration of $292m (£218m) comprises approximately $237m (£177m) for the operating business and an acquired tax asset valued at $55m (£41m) on a net present value basis. This tax benefit is expected to deliver over $100m of cash tax savings over 12 years.
Run-rate cost synergies of at least $3m are expected by 2028.
Implied acquisition multiple of 9.9x¹, based on the $237m consideration for QQUS’ operating business and including run-rate synergies. This excludes the $55m tax benefit acquired and acquisition and integration costs of around $9m.
Accretive to underlying earnings per share in the first full year of ownership, 2028.
Return on invested capital expected to meet the Group’s weighted average cost of capital in the third full year of ownership and exceed it thereafter.
Cash consideration of $292m (£218m) will be funded from existing cash and committed debt facilities. The acquisition adds around 0.6x to leverage, which will remain comfortably within the target range of 1-2x following the transaction, and reduce thereafter.
Completion is expected in the first quarter of 2027, subject to customary conditions, including receipt of relevant US regulatory and security approvals.
Serco’s existing share buyback, which was increased to £150m in August and is due to complete in December 2026, will continue as planned.
Commenting on the acquisition, Anthony Kirby, Serco Group Chief Executive, said: “This acquisition of QQUS builds on the successful integration of MT&S and is another important step in the development of our North American defence platform. QQUS is a strong fit with our Group strategy, adding in-demand capabilities in fast-growing areas such as space, intelligence, surveillance, and reconnaissance. It also expands our customer base and pipeline of opportunities in the US, bringing 800 skilled colleagues delivering critical missions for the US military and federal government.
“QQUS has strong customer relationships, technology-focused capabilities, excellent performance ratings, and order intake momentum. As part of Serco, it will be better placed to deliver sustainable growth with greater scale, lower overheads, and broader customer reach.
“Following completion, our North American revenue will approach $2.5bn, significantly strengthening our position in the world’s largest defence market. We look forward to welcoming our new colleagues to Serco and building on our proven track record of successfully integrating acquisitions to create long-term value.”
Compelling strategic rationale
Continued strategic execution in attractive US defence market: The acquisition will expand Serco’s scale in North America by over 15% to approximately $2.5bn, with defence accounting for over 45%² of the Group. This is aligned with Serco’s strategy of focusing on our highest-priority markets and sectors, which benefit from structural growth drivers. The acquisition follows a strong period for the sector across the Group, with defence delivering 10% organic growth in the first half of 2026.
Expands Serco’s in-demand defence capabilities including in growing space defence domains: QQUS provides technical and programme management, systems engineering, and acquisition support for the development of the United States Space Force’s Proliferated Warfighter Space Architecture programme. QQUS strengthens Serco’s technology positioning, particularly in relation to advanced sensor and persistent surveillance markets, and introduces new capabilities in design, development, and production.
Improves competitiveness and supports organic growth: QQUS will benefit from Serco’s scale in North America and lower overheads, making it better placed to compete for existing and new work. The expanded capabilities and customer relationships the transaction brings will also provide Serco with access to a broader pipeline of opportunities.
The acquisition does not change our 2026 guidance, as set out at our half-year results on 6 August 2026. The next trading update is scheduled for 10 December 2026.
