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General Dynamics picking up CSRA
Posted on Tuesday, 13 February 2018 10:20
US aerospace and defence giant General Dynamics has submitted an offer to acquire CSRA, the New York-listed provider of government information technology (IT) services.

Under the terms of the transaction, the buyer will pay USD 40.75 in cash per share in the target.

Together with the assumption of debts totalling USD 2.80 billion, this values the deal at USD 9.60 billion.

The offer represents a 32.2 per cent premium over CSRA’s closing share price of USD 30.82 on 9th February, the last trading day prior to the acquisition being announced.

Both companies’ boards have already given their unanimous seals of approval to the takeover, which is currently slated to complete during the first half of 2018, subject to the green light from antitrust authorities.

The deal will be financed using cash on hand and new debt.

General Dynamics chief executive Phebe Novakovic said the deal will enable the company to expand its existing capabilities and customer base.

He added: “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.”

His counterpart at CSRA, Larry Prior, said the combination will create a clear leader in the Federal IT segment.

General Dynamics’ generally accepted accounting principles earnings per share and free cash flow per share are expected to be positively impacted by the deal.

CSRA provides next-generation technology products to federal clients.

The company has been publicly traded since November 2015, when it floated on the New York Stock Exchange, having been spun off from Computer Sciences.

Since then it has completed two acquisitions of its own, the first of which closed on the same day as its flotation; it picked up IT consultancy SRA International for USD 1.40 billion.

This was followed by the purchases of NES Associates and Praxis Engineering Technologies, in July and November 2017, respectively.

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