General Dynamics, a global aerospace and defense company offering wide ranging products for business aviation, will acquire CSRA, a leading government IT business with primarily federal customers in the U.S. for $40.75 in cash for all of the outstanding shares of the later. A definitive agreement to this effect was signed between the companies very recently. A $2.8 billion of debt of CSRA is included in the deal with is worth a total of $9.6 billion.
“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and chief executive officer of General Dynamics. “CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins. We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies. 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.”
Larry Prior, chief executive officer and president of CSRA, said, “Our combination with General Dynamics 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. 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.”
Novakovic continued, “I am very pleased to welcome CSRA’s talented leadership team and employees. This combination brings together two industry leaders with highly complementary capabilities to create a strong business with approximately $9.9 billion in revenue and double-digit EBITDA margins in the consolidating Government Technology Services sector.”
General Dynamics anticipates that there would be an increase in its GAAP earnings after the deal and will also have a positive impact on the free cash flow per share in 2019. The company also anticipates to manage an approximate pre-tax cost savings annually of about 2 per cent of the total revenues of the new combined entity by 2020.
“We are committed to maintaining our strong credit ratings and using our robust cash flow for reduction of debt from the transaction, continuation of our dividend policy and the flexible deployment of capital, including ongoing investment in the business,” General Dynamics said in a statement.
All of the outstanding shares of CSRA would be offered to be bought over by a subsidiary of General Dynamics through a cash tender offer. It will offer $40.75 per share in cash.
After the tender offer is completed, all of the non-tended shares would be bought over by General Dynamics through a merger at t he same price per share. Both the companies expect the deal to close in by the first half of the current year.
(Adapted from PRNewswire.com)