WASHINGTON — In a bid to grow its space and satellite business, Boeing announced on Thursday it plans to acquire military contractor Millennium Space Systems, based in El Segundo, California.

Millennium Space Systems develops and manufactures military satellites and has deep expertise in complex systems engineering. It is privately owned and the terms of the acquisition by Boeing were not disclosed. Millennium has received NASA contracts but its primary customer is the U.S. Air Force, which could open up opportunities for Boeing to compete in the national security space sector.

“Millennium Space Systems’ expertise in vertically-integrated small-satellite solutions perfectly complements Boeing’s existing satellite portfolio, and will allow us to meet the needs of a diverse customer set,” Leanne Caret, president and CEO of Boeing Defense, Space & Security, said in a statement. “We look forward to incorporating Millennium Space Systems’ end-to-end mission solution capabilities into our service offerings in satellite operations and data solutions.”

One of Millennium Space Systems’ satellites developed for the Air Force is expected to launch next year. It will host an experimental missile-warning sensor as part of a larger Air Force effort to develop next-generation overhead persistent infrared technologies. Millennium Space Systems also has a Missile Defense Agency contract to develop concepts for countering hypersonic weapons. It is one of nine companies that have submitted proposals to MDA. Boeing is among them, too.

Millennium Space Systems was founded in 2001 and has approximately 260 employees. It has developed satellites ranging from 50 kg to more than 6,000 kg.

“By combining our tools, talent, technologies and culture, we’ll be able to do even more incredible things as part of Boeing,” said Millennium Space CEO Stan Dubyn.

The acquisition is expected to close by the end of third quarter 2018. Once finalized, Millennium Space Systems will become a Boeing subsidiary, operating under its current business model and reporting to Mark Cherry, vice president and general manager of Phantom Works.

Boeing said the transaction will have no impact on Boeing’s 2018 financial guidance or the company’s intent to return nearly 100 percent of free cash flow to shareholders.

Sandra Erwin writes about military space programs, policy, technology and the industry that supports this sector. She has covered the military, the Pentagon, Congress and the defense industry for nearly two decades as editor of NDIA’s National Defense...