Deal creates second largest US IT services contractor
Virginia-headquartered Science Applications International Corporation (SAIC) has announced plans to buy rival Engility in a $2.5 (£1.9) billion all stock deal, creating the country’s second largest independent technology integrator in government services.
SAIC is one of the largest pure-play technical service providers to the US government, with recent contract awards including two with the US Army’s Software Engineering Directorate, worth a combined $1.4 billion, and a $320 million contract as the Environmental Protection Agency’s new IT services provider.
Engility’s contracts span cybersecurity, systems engineering and integration, and high performance computing, as well as data analysis from geospatial data. SAOC is an technical, engineering, intelligence, and enterprise IT specialist,
The combined company will retain the SAIC name and continue to be headquartered in Reston, Virginia.
If approved by regulators, CEO Tony Moraco will continue as CEO and as an SAIC Board member and the company will expand its board to include two additional members from Engility’s Board of Directors.
The acquisition will expand SAIC’s intelligence sector customers and boost its space technology portfolio, Moraco said.
The transaction will create scale in strategic business areas of national interest, such as defense, federal civilian agencies, intelligence, and space, SAIC said, adding that it expands the capabilities of both companies, bringing additional systems engineering, mission, and IT capabilities to a broader base of customers.
CEO Tony Moraco said: “The highly complementary portfolios, combined with our similar cultures, operating models, and histories, make this transaction a compelling combination that enhances the value proposition for our customers, employees, and shareholders”, adding “we look forward to welcoming the Engility team into SAIC, as together we create a market leader in government services”.
SAIC, one of the country’s biggest defence services contractors, generated [pdf] revenue of $4.5 billion in the last fiscal year, with a record $6.7 billion in net contract bookings in fiscal 2018, up from $5.3 billion the previous year.
Virginia-based SAIC will now be second in size among US government contractors only to Leidos Holdings Inc., which was the successor to an earlier legal iteration of SAIC. Leidos then spun off the current entity in 2013 as an independent IT services-focussed entity, which retained the SAIC name.
Moraco told Reuters that an increased U.S. defense budget and a two-year budget deal reached earlier this year that lifted caps on defense spending emboldened SAIC to pursue the deal.