Kratos Defense & Security Solutions Inc. announced on May 8 that it has signed a deal to acquire Composite Engineering Inc., a Sacramento company that makes jet-powered target drones as well as composite structures.

Kratos will pay $155 million for the company; some $135 million of the amount will be in cash and $20 million will be in stock.

Kratos reported that CEI had $94 million in revenue during 2011. CEI sells to several branches of the U.S. military as well as to certain foreign countries. Kratos already has a relationship with the business, producing components for some of CEI’s target drones.

Separately, Kratos said on May 8 that it intends to sell $55 million in stock to Oak Investment Partners, an existing Kratos shareholder. Kratos said that it will use the funds for the CEI acquisition and for general corporate purposes.