Serco acquires QinetiQ’s US business

Serco Inc, a subsidiary of Serco Group plc, has agreed to acquire QinetiQ Group plc’s US business (QQUS) for a total cash consideration of $292 million (£218m), representing a purchase price of $237 million for the operating business and a $55 million acquired tax benefit.

QQUS is a specialised provider of engineering, technology and mission support to the US defence and national security markets. Its capabilities support some of the US Government’s most critical missions, including integrating satellite constellations for secure communications and missile tracking, operating airborne radar surveillance of US borders and providing robotics and naval control systems.

How the agreement is set to open further growth opportunities across international defence markets

The acquisition builds on Serco’s US defence platform and follows four defence-focused acquisitions since 2018, most recently, the successful integration of MT&S in 2025. QQUS further increases Serco’s scale and customer access in the world’s largest defence market.

It significantly broadens Serco’s position with the US Space Force and adds complementary technology, including advanced sensor, imaging and target-recognition systems, as well as control solutions used to launch and recover aircraft from US Navy carriers. These capabilities deepen Serco’s position with the US Army and US Navy.

Serco is an established provider to the US federal government. Its North America division generates annual revenue of approximately $2 billion (£1.51bn) and has capabilities and customer relationships complementary to those of QinetiQ Inc.

QinetiQ believes Serco provides scale to drive the future growth of the US business and is a good long-term owner for its customers and employees. In May 2026, QinetiQ announced a review of its US business and options to deliver enhanced returns. Having assessed all relevant options, the Group has concluded that the agreed sale offers the best route to realise value for all stakeholders.

Using its strengthened balance sheet, QinetiQ will concentrate its resources on the UK, European, NATO and key allied defence and security markets, where it holds stronger positions and sees more attractive opportunities for growth and returns. The Group’s differentiated capabilities, underpinned by long-term customer relationships and contracts, are aligned with growing demand for accelerating warfighting readiness across these core markets.

Following completion, the Group aims to return £200 million of the proceeds back to shareholders and will increase investment in digital and AI technology, infrastructure and its people to deliver enhanced value for its customers and sustainable profitable growth for shareholders.

Why the acquisition will expand development of US space, intelligence, surveillance and reconnaissance capabilities

In calendar year 2027, Serco expects QQUS to generate revenue of approximately $370 million (£276m) and underlying operating profit of $2 million (£16m). Cash consideration of $292 million (£218m) comprises approximately $237 million (£177m) for the operating business and an acquired tax asset valued at $55 million (£41m) on a net present value basis. This tax benefit is expected to deliver over $100 million of cash tax savings over 12 years. Return on invested capital is expected to meet the Group’s weighted average cost of capital in the third full year of ownership and exceed it thereafter. Cash consideration of $292 million (£218m) will be funded from existing cash and committed debt facilities.

Completion is expected in the first quarter of 2027, subject to customary conditions, including receipt of relevant US regulatory and security approvals. Serco’s existing share buyback, which was increased to £150 million in August and is due to complete in December 2026, will continue as planned.

Anthony Kirby, Serco Group Chief Executive, said: “This acquisition of QQUS builds on the successful integration of MT&S and is another important step in the development of our North American defence platform. QQUS is a strong fit with our Group strategy, adding in-demand capabilities in fast-growing areas such as space, intelligence, surveillance and reconnaissance. It also expands our customer base and pipeline of opportunities in the US, bringing 800 skilled colleagues delivering critical missions for the US military and federal government.

“QQUS has strong customer relationships, technology-focused capabilities, excellent performance ratings, and order intake momentum. As part of Serco, it will be better placed to deliver sustainable growth with greater scale, lower overheads, and broader customer reach.

“Following completion, our North American revenue will approach $2.5 billion, significantly strengthening our position in the world’s largest defence market. We look forward to welcoming our new colleagues to Serco and building on our proven track record of successfully integrating acquisitions to create long-term value.”

What is the strategic rationale for the acquisition?

The acquisition will expand Serco’s scale in North America by over 15% to approximately $2.5 billion, with defence accounting for over 45% of the Group. This is aligned with Serco’s strategy of focusing on its highest-priority markets and sectors, which benefit from structural growth drivers. The acquisition follows a strong period for the sector across the Group, with defence delivering 10% organic growth in the first half of 2026.

One of the key factors in Serco’s acquisition of QQUS, is that it expands Serco’s in-demand defence capabilities including in growing space defence domains. QQUS provides technical and programme management, systems engineering and acquisition support for the development of the United States Space Force’s Proliferated Warfighter Space Architecture programme.

QQUS’ acquisition also strengthens Serco’s technology positioning, particularly in relation to advanced sensor and persistent surveillance markets and introduces new capabilities in design, development and production.

Serco believes that QQUS itself will benefit from Serco’s scale in North America and lower overheads, making it better placed to compete for existing and new work. The expanded capabilities and customer relationships the transaction brings will also provide Serco with access to a broader pipeline of opportunities.