Drone maker now part of giant

By David Wichner

Tucson, Arizona | Published: 06.12.2009

What can a small, 50-employee technology company in Tucson offer the world’s second-largest defense contractor?

Quite a lot, based on comments from executives of BAE Systems who were in Tucson Thursday for their first local appearance as new owners of homegrown Advanced Ceramics Research, or ACR.

BAE Systems Inc., the North American subsidiary of British-based BAE Systems PLC, announced earlier this week that it had completed its buyout of ACR, a maker of unmanned aircraft and advanced materials, in a stock purchase worth $14.7 million.

Officials of both BAE and the former ACR described the deal as a perfect fit that will complement each company’s strengths in the burgeoning market for unmanned aircraft, known generally as unmanned aerial vehicles, or UAVs.

“It’s bringing a lot of resources to our disposal to really take advantage of opportunities that we are struggling to take advantage of at our current size,” said Mark Angier, co-founder and former president of ACR who is staying on as director of integration for BAE Systems.

Angier said BAE’s money and expertise will help the former ACR flourish in its market niche for small, relatively short-range, “tactical” or “expeditionary” UAVs.

“They are very important to the military right now,” Angier said. “In its current campaigns, a lot of the work is very different these days. In Afghanistan and Iraq, these tactical systems are really gaining favor.”

With its purchase of ACR, BAE gets a technologically mature lineup of tactical UAVs to complement the larger vehicles it has already developed, said Ted Wright, president of the BAE Technology Solutions & Services unit.

“What they brought to us was several tactical UAVs that are at the leading edge of technology today. We didn’t have those, so it was great to pick that up,” Wright said.

BAE currently is developing two larger, long-range UAVs for the United Kingdom. The Mantis is a long-range UAV capable of operating autonomously and carrying weapons, and the HERTI (High Endurance Rapid Technology Insertion) is an autonomous reconnaissance craft.

The former ACR has three UAVs in production, including the Silver Fox — which has been used by Marine Corps units in Afghanistan and Iraq to survey combat areas. The other vehicles are the larger Manta, a bat-wing UAV designed to carry a variety of payloads; and the Coyote, a smaller UAV that can be launched by submarines via tubes used to launch sonar buoys.

“They’ve got wonderful vehicles — we’ve got wonderful sensors to put on those vehicles. That’s a match made in heaven,” Wright said.

The defense giant — which has more than 100,000 employees worldwide and had 2008 revenues of $30 billion — will keep the local company and staff of about 50 people intact. One exception is ACR co-founder Anthony Mulligan, who is no longer with the company, according to BAE officials.

“There are no plans to move from here,” said Wright. “Any expansion will be dictated by the market.”

Future expansion could be off the battlefield, an executive of BAE’s UAV program said.

The company is looking to adapt UAVs to such nonmilitary uses as border surveillance, environmental monitoring, pipeline monitoring and aerial assessment and emergency communications for disaster response, said Mark Brown, BAE vice president for unmanned air systems.

“We think their Silver Fox, in particular, is the key to opening up the civilian and commercial markets,” Brown said.

A defense industry analyst said BAE’s acquisition of ACR is part of a larger trend of niche deals by major defense companies for technologies, particularly those with civilian uses.

“With the defense budget flattening out — and perhaps turning down over the next few years — big companies are looking for new businesses they can get into that are likely to continue growing, and UAVs are one of them,” said Paul Nisbet, an aerospace analyst and principal of JSA Research in Sarasota, Fla.

Bob Hagen (1003 Posts)