Company sheds wireless focus for $24 million
By Kathryn Balint
UNION-TRIBUNE STAFF WRITER
July 10, 2007
HOWARD LIPIN / Union-Tribune
Wireless Facilities is selling its wireless deployment business and name for $24 million.
San Diego-based Wireless Facilities said yesterday that it is selling its wireless deployment business and its name for $24 million to Los Angeles private equity firm Platinum Equity.
The sale is the final step in transforming Wireless Facilities from a builder of wireless networks for carriers into a government contractor focused on national defense, security and network services.
The company said it will sell technical and information technology services to the U.S. Department of Defense, Department of Homeland Security and other federal, state and local government agencies.
Wireless Facilities said it will change its name to better reflect its new business focus.
“This is the final stage in the transformation strategy we have discussed over the last several quarters,” Chief Executive Eric DeMarco said.
“Looking forward, we are now extremely well-positioned to execute on our vision of providing high-end government IT solutions, weapon systems maintenance, command and control systems engineering, communication systems networking and security systems integration,” he said. “After completion of the divestiture announced today, the resulting business is expected to generate over $200 million in annual revenues, with a current bid and proposal pipeline of approximately $1.5 billion.”
Approximately 450 technical and support employees who work for Wireless Facilities deployment business throughout the United States will be offered jobs under the new owners, Wireless Facilities said.
The contractor will have 1,200 employees after the sale closes, which is expected to be in the middle of this month. The number of Wireless Facilities employees peaked at 2,500 within the past two years.
Platinum Equity did not return a phone call yesterday seeking comment on its acquisition. The company specializes in the merger, acquisition and operation of companies that provide services in information technology, telecommunications, logistics, manufacturing, and entertainment distribution.
Since its founding in 1995, Platinum Equity has completed more than 70 acquisitions with more than $17 billion in aggregate annual revenue, the company said.
In May, Wireless Facilities sold its U.S. engineering unit for $39 million to LCC International, a McLean, Va., company that had previously purchased Wireless Facilities' operations in Europe, the Middle East and Africa.
Wireless Facilities was founded in 1994 to design, deploy and manage wired and wireless communication networks for large wireless carriers. When the current management team, including DeMarco, joined Wireless Facilities in late 2003 and 2004, the company made the decision to diversify by offering its services to government.
As more government services have been offered, Wireless Facilities has divested itself of its services to wireless carriers.
Bud Leedom, publisher of the California Stock Report and operator of californiastocks.com, said DeMarco has led the transformation of Wireless Facilities into a government contractor because that's what the chief executive knows best.
“We're probably seeing the reincarnation of Titan Corp.,” Leedom said. “It's clear he (DeMarco) is going in the direction he knows. He just didn't fully make a connection with the other businesses operated by Wireless Facilities. He's jettisoned everything he didn't have a complete grasp on.”
DeMarco had worked for six years for San Diego-based Titan, rising to president and chief operating officer, before leaving in March 2003. He joined Wireless Facilities later that year as its chief executive.
Titan, which provided information and communications systems services to the government, was sold to New York-based L-3 Communications in 2004.
Wireless Facilities has not filed financial reports for the first quarter of this year or the fourth quarter of 2006 as the company investigates whether it backdated stock options without notifying investors.
Spokesman Mike Banas said yesterday he did not have a schedule for when the investigation would be complete.
In the course of the investigation, Wireless Facilities discovered discrepancies that led to lawsuits by the company and the U.S. Securities and Exchange Commission alleging that Wireless Facilities' former stock options administrator and his wife fraudulently issued company stock options and sold them at a multimillion-dollar profit.
Vencent Donlan, 44, the former stock options administrator, pleaded guilty last week to bilking Wireless Facilities out of more than $6.3 million.
“The company is pleased to see the criminal case has been completed and that they were able to complete it in a timely manner,” Banas said.
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