August 5, 2016 / 8:25 PM / in 2 years

Apollo Global in talks to buy Constellis

(Reuters) - Private equity firm Apollo Global Management LLC (APO.N) is in discussions to buy Constellis Holdings LLC, the owner of the U.S. military security services business formerly known as Blackwater, a spokeswoman for Constellis said on Friday.

Leon Black, Chairman and CEO Apollo Global Management, LLC, takes part in Private Equity: Rebalancing Risk session during the 2014 Milken Institute Global Conference in Beverly Hills, California April 29, 2014. REUTERS/Kevork Djansezian

The potential deal illustrates how one of the world’s largest private equity firms now views Constellis as an attractive business. In April last year four former Blackwater security guards received long prison sentences for the fatal shooting of 14 civilians in Iraq in 2007.

While the Constellis spokeswoman declined to comment on the price being negotiated with Apollo, sources familiar with the deal who asked not to be identified said it would value Constellis at more than $1 billion, including debt.

The management of Constellis will be investing in the buyout alongside Apollo, one of the sources added. Apollo declined to comment.

The Constellis spokeswoman cautioned that the negotiations had not been finalized. Reuters reported in June that Constellis was exploring a sale.

Headquartered in Reston, Virginia, Constellis provides training and security services focused on counter terrorism, force protection, law enforcement and security operations.

The company employs more than 8,000 staff, most of whom are former military or law enforcement officials, and operates in 25 countries across Africa, the Americas, Asia, Europe and the Middle East, according to its website.

A sale of Constellis would come as U.S. federal procurement reforms have intensified competition among defense service contractors, which have otherwise benefited from continued geopolitical turmoil in the Middle East and North Africa.

This is not the first time that Apollo has shown interest in companies focused on serving the U.S. government. Apollo participated in the auction of PAE, another private equity-owned government contractor, which was ultimately purchased by Platinum Equity LLC in March.

Named Blackwater when it was founded in 1997 by former U.S. Navy SEAL officer Erik Prince, the company changed its name to Xe Services LLC in 2009 after the deadly 2007 shootout in Iraq tarnished its brand.

In 2010, Prince sold the company to investment firms Forte Capital Advisors LLC and Manhattan Strategic Ventures LLC. They renamed the business ACADEMI. Forte managing partner Jason DeYonker had been a co-manager of Prince’s family office.

In 2014, Forte Capital and Manhattan Strategic merged the company with another private security firm, Triple Canopy, to form Constellis Holdings. The company expanded further last year with the acquisition of security company Olive Group.

Reporting by Mike Stone in New York; Editing by Leslie Adler

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