Luxembourg-headquartered SES has acquired the satellite business of US defence contractor Leonardo DRS, which it will integrate with its own US-based branch, SES GS Photo: Romain Gamba / Maison Moderne

Luxembourg-headquartered SES has acquired the satellite business of US defence contractor Leonardo DRS, which it will integrate with its own US-based branch, SES GS Photo: Romain Gamba / Maison Moderne

SES has signed an agreement to buy the satellite business of US arms contractor Leonardo DRS, which will be integrated into the Luxembourg company’s US subsidiary, SES Government Solutions.

The $450m transaction has been approved by the boards of both companies and is subject to regulatory approvals. The deal should be finalised in the second half of this year.

SES Government Solutions, or SES GS, exclusively serves US government clients, with its head office located in Reston, Virginia, a roughly 20-minute drive from the Pentagon, which headquarters the US department of defence.

“SES GS is the only satellite operator with operational experience delivering multi-orbit, multi-band managed satcom services to the department of defence (DoD) and its warfighters,” said Pete Hoene, president and CEO of SES Government Solutions in a statement, adding that the deal “unites the leader in multi-orbit satellite networking with unparalleled US Government satellite communications integration.”

Leonardo’s Global Enterprise Solution’s business has offices in Virginia, Montana, Florida and Alaska and delivers end-to-end satellite connectivity for maritime, airborne and ground-mobile operations.

The transaction will allow Leonardo to focus on its core activities, the company said in Tuesday’s statement. Global Enterprise Solutions (GES) had already been working with the US government and other clients.

Opposition criticism

Both businesses have “deep and trusted relationships with US government agencies,” Hoene said, adding that they deliver the “best network solutions to meet unique and demanding US government requirements.”

SES GS is a wholly owned subsidiary of the Luxembourg-based parent company SES. The Luxembourg state owns a third of SES in direct and indirect shares. Opposition parties such as Déi Lénk have long criticised Luxembourg’s implicit support for US reaper and predator drone missions carried out by the US with SES satellite capacity.

The parent company of Leonardo DRS--Italy-based Leonardo SPA--is currently blacklisted for investment by Luxembourg’s pension fund for controversial weapons activities. The US subsidiary was a major sponsor at this year’s GovSatCom, a one-day conference hosted in Luxembourg bringing together defence and satellite players.

Network business

“This investment reinforces our commitment to provide industry-leading solutions and services for government customers while delivering sustained growth for SES in a high-value segment in which we have a track record of partnership and success,” said Steve Collar, CEO of SES, in a separate statement.

Leonardo’s US satellite business has projected annual revenue of over $250m, and SES is expecting to double revenue from the US government with the combination of Leonardo DRS’s satellite business and SES GS.

The Luxembourg satellite operator said research shows global industry revenue from government services is set to experience an almost four-fold expansion between 2021 and 2030 on the back of increased demand for reliable, secure connectivity to support a wide range of government requirements, including intelligence, surveillance and reconnaissance, and communications on the move.

As SES’s revenue from its video segment is flattening--with online streaming services taking over market shares--it is expanding its network business, which has grown 30% in revenue since 2017, the company said.

In 2021, SES had , with video accounting for 59% of business compared to 41% for its network branch.

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