Lockheed Martin is reportedly leading efforts to acquire Ultra Maritime, a naval technology division owned by private equity firm Advent International, in a deal valued at approximately $3.5 billion. The move comes amid heightened global demand for advanced military technologies driven by ongoing conflicts in Ukraine, tensions with Iran, and increased defense spending.

Ultra Maritime operates as part of Cobham Ultra, a business unit formed after Advent took Cobham, a British defense contractor, private in 2019 for £4 billion and subsequently merged it with Ultra Electronics in a £2.6 billion acquisition in 2021. The division specializes in undersea defense systems, including sonar and sensor technologies designed to detect torpedoes and submarines, with customers including the U.S. Navy and the United Kingdom’s Royal Navy.

Sources close to the negotiations said that while Lockheed Martin has gained an advantage over other U.S. and European bidders, no formal agreement has yet been finalized, and the situation remains subject to change. Talks are ongoing, with a potential announcement possible as early as next week. Several other competitors have also expressed interest in Ultra Maritime during a competitive auction process.

Under Advent’s ownership, Ultra Maritime’s revenue has significantly increased, expected to reach around $784 million in 2024, up from $494 million the previous year. The company has focused heavily on research and development, investing roughly $170 million over three years to enhance product innovation and boost production capacity amid growing demand.

In 2023, Ultra Maritime entered into a partnership with Anduril Industries, a defense technology firm led by Palmer Luckey, to develop next-generation anti-submarine systems that combine Anduril’s autonomous underwater vehicles with Ultra Maritime’s sensor technology.

The company employs approximately 2,000 people across countries within the Five Eyes intelligence alliance, which includes the United States, United Kingdom, Canada, Australia, and New Zealand.

Lockheed Martin, as a leading U.S. defense contractor, is central to government initiatives aimed at ramping up weapons manufacturing to replenish stockpiles following recent U.S. military operations in Iran. CEO James Taiclet recently met with former President Donald Trump alongside other defense executives. The Trump administration has applied pressure on defense companies to increase investments in production, including through an executive order issued in January that threatened to block dividend payments.

Neither Lockheed Martin nor Advent International provided comments on the potential transaction.