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General Dynamics to acquire CSRA

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Defense contracting giant General Dynamics plans to acquire government IT services company CSRA.

The offer is $40.75 in cash for each CSRA share.  Including assumption of $2.8 billion in CSRA debt, the transaction is valued at $9.6 billion.

Both companies are based in Falls Church.

CSRA has annual revenue of about $5 billion and employs 19,000 workers. The company was created in 2015 when it was spun off from CSC and merged with SRA International.

General Dynamics is a global defense and aerospace company with annual revenue of $31 billion. It has nearly 99,000 employees.

“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base” of General Dynamics's IT division,  Phebe Novakovic, the chairman and chief executive officer of General Dynamics said in a statement.

“CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins," she said. "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.”

General Dynamics expects the transaction to generate estimated annual pre-tax cost savings of approximately 2 percent of the combined company revenue by 2020.

An acquisition agreement has been approved by the board of directors of both companies.

Under the terms of the agreement, a General Dynamics subsidiary will purchase all of the outstanding shares of CSRA common stock for $40.75 per share in cash.

The offer is subject to customary conditions, including antitrust clearance and the tender of a majority of the outstanding shares of CSRA common stock.

General Dynamics expects to complete the deal in the first half of 2018.

Stone Key Group LLC served as exclusive financial adviser to General Dynamics, and Jenner & Block LLP served as legal counsel.

Evercore and Macquarie Capital served as financial advisers to CSRA, and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel.




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