Restructurings in the global arms industry usually catch my attention, but this one is really interesting. Here's the electronic lucite that I received the other day from the deal-doer, Houlihan Lokey:
Houlihan Lokey is pleased to announce the sale of ERA a.s. (ERA), a subsidiary of SRA International, Inc., to OMNIPOL a.s. (OMNIPOL). The transaction closed on November 21, 2011.
With over four decades of experience, ERA is a pioneer in state-of-the-art air traffic management and surveillance systems for civil and military applications. Located in Pardubice, Czech Republic, ERA is a world leader in developing and manufacturing high-performance, high-value surveillance and flight tracking solutions that employ multilateration, ADS-B and ADS-X technologies. ERA's signature surveillance systems include fixed, mounted and deployable technologies encompassed in its MSS, SQUID and VERA products. The company serves a global customer base with installations in numerous countries.
OMNIPOL is a Czech-based equipment and solutions provider.
As I will note below, that last line says less than it could.
ERA is the Czech electronics firm that has been said to have a developed some time back a passive technical means for detecting stealth aircraft. Supposedly it's a bit like the passive sonar technique of looking for where things aren't—if the biologicals aren't honking in that part of the ocean, there might be something else there. In this case, the wide area sensor array was looking for slight variations in the background noise—if it's being absorbed or scattered in an unexpected way, then there might be something there.
Just a few years ago, there was a widespread speculation in the Czech press that the US Defense Department had leaned on SRA to buy ERA, to keep it out of the hands of a Russian suitor. I naturally have no confirmation of this. Whatever the case, I can imagine SRA selling ERA again, but it is the buyer here that is particularly interesting. OMNIPOL (excellent name, truly of Bond-movie quality) is the formerly state-owned weapons export outfit that, back in the day, built some excellent customer relationships far and wide throughout the world. It was, incidentally, once the monopoly supplier of Semtex, which is just a whole other talk show.
Now, those marketing connections and skills are great assets in the business, and they've been pretty notable across the Czech industry for decades. But probably someone wouldn't be keen on OMNIPOL selling certain technologies of ERA to certain customers worldwide. So, either some technologies—and presumably people—were retained in SRA, or some assurances have proceeded from Prague regarding what will be sold where. That's pretty imaginable: it isn't generally in the interests of NATO members to export wildly.
The general point is that we may see more of these deals over the next few years. Falling budgets in the US will induce changes in spending patterns, which will in turn induce portfolio reshufflings. Some of the assets sold will go to successful bidders outside the US, and in some cases, the proposed transfer of the capabilities in those companies will invite scrutiny from the Committee on Foreign Investment in the United States—the CFIUS process, as they say. That's been with us for a long time; it's just that we should expect to see quite a few more interesting cases in the near future.
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