If you thought the GovCon space was done with or near the end of heavy merger-and-acquisition deals this year, you were wrong.
The future Computer Sciences Government Services — CSC’s U.S. public sector spinoff — and Fairfax, Va.-based contractor SRA International will combine forces in a move set to take effect in November, when “CSCGov” is scheduled to become its own public company.
Mike Lawrie, CSC CEO and future CSCGov board chairman, told investors in a call to discuss the transaction Tuesday he forecasts continued M&A deals in the government services arena with “a number of assets that are for sale in this space.”
July saw Lockheed Martin announce its plan to spin off or sell much of its $6 billion information technology and technical services business and L-3 Communications say it is looking at a similar move for its estimated $1.2 billion national security solutions segment.
BAE Systems said in April it has received offers for its U.S. information technology support business and hired external advisers to help review that unit’s future within BAE Systems Inc. — the British contractor’s U.S. subsidiary.
“With the industry consolidating, with scale becoming increasingly important as we begin to execute these next-generation solutions and strategies, we felt we wanted to be an early mover in creating a platform that was almost solely dedicated to IT services, ” Lawrie said to investors.
For SRA, this decision to join up with CSCGov represents both a change of direction and a new chapter in the history of a company founded by Dr. Ernst Volgenau in 1978 out of his basement in Reston.
The company filed a registration statement with the Securities and Exchange Commission in July for an initial public offering, which would have been SRA’s second-ever IPO after its first in 2004.
SRA’s shareholder group led by Volgenau and Providence Equity Partners — who bought SRA for $2 billion in 2011 to take it private — will hold a 15-percent stake in the combined company.
Our newsroom editor Ross Wilkers spoke to Federal News Radio this week for a segment to analyze the CSCGov-SRA deal and other developments from August surrounding the GovCon Index, Executive Mosaic’s composite stock index of 30 publicly-traded contracting firms.
Wilkers and “In Depth” host Francis Rose examined how that merger fits into the GovCon sector’s larger consolidation narrative for 2015 and why near-zero interest rates are one of many factors behind the year’s flurry of deals in the industry.
Additionally, Wilkers and Rose overviewed the Index’s wild movements in August and how it mirrored a historic period of volatility in Wall Street and global stock markets.
Click here to listen to the full 11-minute segment that aired Thursday.
Time is running out to reserve your seat at the Potomac Officers Club‘s next “CIO Speaker Series” event Sept. 24, which will feature Chris Hamm of the General Services Administration as the keynote for a discussion on “Innovation in Acquisition.”
Hamm leads the agency’s Federal Systems Integration and Management Center, which provides U.S. agencies acquisition support for information technology and professional services.
Additionally, we are looking forward to the POC’s 2015 Cybersecurity Summit on Oct. 15 with Navy Adm. Michael Rogers, head of the National Security Agency and Cyber Command, lined up as the headline speaker.
Click here to sign up for these events and view POC’s full calendar.
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