VSE calls off $100M sale of business to equity firm
Federal, defense segment employs about 1,000 people
Alexandria-based distribution and maintenance provider VSE Corp. has called off an agreement to sell off its federal and defense segment for up to $100 million to Louisiana-based private equity firm Bernhard Capital Partners.
The deal was announced in May, and the companies said in a news release Wednesday that they mutually agreed to terminate the sale and no fees were required to be paid as a result. Necessary approvals and closing conditions weren’t expected to be completed in “a reasonable amount of time” for reasons unrelated to either company, the companies said.
Michael Perlman, a vice president and spokesperson for VSE, said the business segment, which employs about 1,000 people, remains for sale. He added that a sale could occur in the first half of 2024. The deal with Bernhard Capital included $50 million cash and up to an additional $50 million if performance milestones related to federal contracts were met.
“While today’s announcement is unexpected, we intend to continue to pursue the divestiture of the federal and defense segment to accelerate our growth strategies as a two-segment aftermarket business,” VSE President and CEO John Cuomo said in a statement. “Our decision to terminate the agreement did not come lightly, but we believe it provides a favorable opportunity for our team members and shareholders to move more quickly and effectively toward the sale of this business and its assets.”
VSE announced the deal May 1, saying at the time it wanted to simplify the company into two segments supporting aviation and fleet distribution and maintenance repair operations and to tailor its capital allocation to its growing aviation and fleet segments.
In July, VSE acquired Desser Aerospace’s distribution and maintenance, repair and operations sectors for $124 million. Following the Desser acquisition, VSE sold Desser’s proprietary solutions businesses to aerospace systems and parts manufacturer Loar Group for $30 million.