Engility Holdings Inc. (NYSE: EGL) has agreed to acquire consulting firm Dynamics Research Corp. (NASDAQ: DRCO) in an effort to gain new customers and contracts, grow scale and diversify its service offerings.
Both companies’ board of directors have signed off on the deal for Engility to buy all of DRC’s outstanding common shares for $11.50 per share in cash, Engility said Monday.
Engility said the acquisition would raise its 2014 earnings and be ‘significantly’ accretive to those results in 2015 and beyond.
“This acquisition is consistent with our strategy to expand and diversify our services offerings and presence with adjacent customers, ” Tony Smeraglinolo, Engility president and CEO, said.
“It positions Engility within new higher-end markets, supporting enduring customer priority missions, and provides access to key prime contract vehicles.”
“Long-term success in today’s consolidating federal services market will depend on both organic growth and strategic M&A to derive the benefits of scale and provide contracting flexibility to our customers, ” Smeraglinolo added.
DRC provides information technology and management consulting services for various sectors including defense, healthcare, homeland security, research and development, intelligence, surveillance and reconnaissance.
Engility noted DRC holds a prime position on around 80 percent of its more than 300 active contracts, employs more than 1, 100 employees and estimates DRC will generate between $274 million and $277 million in 2013 revenue.
The transaction is scheduled to complete in the first quarter of 2014, pending antitrust and regulatory approvals.
Bank of America Merrill Lynch and SunTrust Robinson Humphrey Inc. serve as financial advisers for Engility and Dynamics Research, respectively.
