Under the agreement, announced today, General Dynamics will buy all shares of CSRA for $40.75. The acquisition “represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and CEO of General Dynamics.
“We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies,” she continued. “The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”
This deal brings together two industry leaders with highly complementary capabilities to create a strong business with nearly $9.9 billion in revenue and double-digit EBITDA margins in the consolidating government technology services sector, Novakovic said.
Larry Prior, CEO and president of CSRA, said the combination of the two businesses “represents an excellent outcome for CSRA’s stockholders, employees and customers.”
“It builds on strong shared values, culture and a passion for serving our customers’ missions,” he said. “We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”
General Dynamics expects the acquisition to be finalized in the first half of 2018. The company says it anticipates retaining strong credit ratings with net debt of approximately $10.5 billion.
“GD’s doubling down on the federal IT market puts an exclamation point on the shifted perception of the market’s future prospects,” said Bob Kipps, managing director at KippsDeSanto & Co. “Just a couple years ago, larger firms were exiting the federal vertical and/or their technology services units.”