September 11, 2018 |
International,
C4ISR
WASHINGTON (Reuters) - Science Applications International Corp (SAIC) (SAIC.N) said on Monday it will acquire Engility Holdings Inc (EGL.N) for $1.5 billion in stock, a deal that will turn it into the second-largest independent U.S. government services contractor.
The acquisition is the latest example of how increased defense spending under President Donald Trump and the Republican-led Congress is driving contractors to pursue mergers so they have more scale to bid on bigger projects, spanning everything from outdated computer systems to space exploration.
Engility shareholders will receive $40.44 in SAIC stock for each of their shares, an 11.5 percent premium to Engility's closing price of $36.24 on Friday, the companies said. SAIC will assume $900 million in Engility debt, giving the deal a total value of about $2.5 billion.
On completion of the deal early next year, SAIC's board will expand to 11 seats from nine, and SAIC shareholders will own about 72 percent of the combined company.
Engility, based in Chantilly, Virginia, provides skilled personnel to the U.S. departments of defense, homeland security and justice, among others. The acquisition will boost SAIC's offerings to its space customers and expand its customer base in the intelligence community, SAIC Chief Executive Tony Moraco said in an interview.
The increased U.S. defense budget and a two-year budget deal reached earlier this year that lifted caps on defense spending also emboldened SAIC to pursue the deal, Moraco added.
Full article: https://www.reuters.com/article/us-engilityholdings-m-a-saic/saic-to-buy-rival-government-services-contractor-engility-for-1-5-billion-idUSKCN1LQ1CG
