US defence contractor Scitor has been bought by technology solutions group SAIC (Science Applications International Corp) for US$790m from its private equity owner Leonard Green & Partners.
SAIC said the purchase price implied a trailing 12 month…
US defence contractor Scitor has been bought by technology solutions group SAIC (Science Applications International Corp) for US$790m from its private equity owner Leonard Green & Partners.
SAIC said the purchase price implied a trailing 12 month adjusted EBITDA multiple of 10.6x, net of US$132m tax benefits.
It has secured a firm financing commitment to help fund the deal which it plans to convert into permanent financing at a later date, and will use cash-on-hand to make up the balance. SAIC expects to generate US$20m in pre-tax cost synergies.
Scitor boasts annual revenues of around US$600m and has around 1,500 employees. It has operations in the space sector including satellite command and control, space control, launch and direct space support.
Explaining the rationale for the transaction, SAIC said the acquisition was part of its strategy to expand into the intelligence community and Air Force markets. It said the acquisition would enable it to move into these markets due to Scitor’s access to classified contracts, cleared personnel and a robust security infrastructure. More than half of Scitor’s staff hold advanced level security clearance.
Timothy Dills, Scitor’s president, said: “The blending of Scitor and SAIC is the logical next step in Scitor’s evolution as we continue to support the increasing needs of our intelligence community and Department of Defense customers.”
SAIC’s CEO, Tony Moraco, said that operating as one company represented an opportunity “to create shareholder value by gaining access to new customers and leveraging capabilities from both companies to increase revenues and earnings.”
The acquisition marks the latest consolidation deal between defence and national security companies that have been hit by the decline in US defence spending over recent years.
It follows larger tie-ups such as Harris and Exelis, agreed in early February, and Orbital Sciences takeover of ATK announced last year.
When asked about acquisitions on a conference call in December, SAIC’s Moraco said: “The market generally has been talking about the need for some level of consolidation given the run-ups over the last 10 to 12 years that there is a lot of properties, a lot of companies all kind of jockeying for similar work given the budget environment.”
However, he said he did not expect the competitive landscape as a whole to change dramatically.
SAIC was advised by Citigroup and Leonard Green & Partners mandated Sagent Advisors.
Arnold & Porter served as legal counsel to SAIC and Scitor was represented by Latham & Watkins.
SAIC was part of a larger company also called SAIC until September 2013, when it was spun-off. The remaining larger group, which focuses on defence and health, is now known as Leidos.
