This week, let’s take a look at the current landscape of mergers and acquisitions in the GovCon sector. Notable M&A activity includes:
- CenturyLink adjusting the closing date of its purchase of Level 3 Communications
- L3 Technologies purchasing Adaptive Methods
- UTC’s agreement to purchase of Rockwell Collins
- H.I.G. Capital’s purchase of NCI
- Accenture acquiring Phase One Consulting Group
- Jacobs Engineering Group purchasing CH2M
- Shareholder approval for MDA’s purchase of DigitalGlobe
On September 12th, CenturyLink announced that it had pushed back the projected closing date of its pending $34 billion acquisition of Level 3 Communications from September 30thto mid-late October. The revised timeframe for the transaction’s intended closure was based on the California administrative law judge’s recommendation for the California Public Utilities Commission to clear the deal at its October 12th meeting. CenturyLink CEO Glen Post said 24 states and territories have cleared the transaction since the start of the regulatory approval process.
Also on September 12th, L3 Technologies purchased systems engineering firm AdaptiveMethods for an undisclosed sum. By purchasing Adaptive Methods, L3 Technologies is further expanding its footprint in the undersea market. L3 said that it will incorporate Adaptive Methods into its sensor systems business segment to operate as L3 Adaptive Methods. Christopher Kubasik, L3 president and COO, said the transaction will provide L3 with access to Adaptive Methods’ unmanned undersea vehicle platforms and further support the U.S. Navy’s requirements.
On September 4th, United Technologies Corp. agreed to purchase Rockwell Collins through an estimated $30 billion transaction. UTC hopes that the purchase will aid efforts to establish a new aerospace systems supplier. UTC said that it will pay approximately $23 billion in cash and stock and assume $7 billion in net debt from Rockwell Collins. Greg Hayes, UTC chairman and CEO, said the acquisition will add to UTC’s aerospace business and bolster its complementary aerospace systems offerings. Both companies expect to close the transaction during the third quarter of 2018, subject to approvals by Rockwell Collins shareholders and regulatory authorities. Rockwell Collins will be combined with UTC’s aerospace systems business to form a new unit called Collins Aerospace Systems.
On August 16th, H.I.G. Capital purchased government IT company NCI in an approximately $283 million deal, taking NCI from the public sector into the private. Rick Rosen, an H.I.G. executive managing director, said that he believes NCI will continue its efforts to provide differentiated technology platforms to federal clients.
In early August Accenture wrapped up its acquisition of federal government cloud services provider Phase One Consulting Group for an undisclosed sum. Accenture has stated that it pursued the acquisition to expand its Salesforce and cloud offerings within the federal market. The purchase marks Accenture’s seventh Salesforce-related acquisition since 2014.
Also occurring in early August was Jacobs Engineering Group’s purchase of CH2M for anestimated $3.27 billion transaction as both companies aim to deliver additional infrastructure and engineering services to government and private sector clients. Jacobs will pay $2.85 billion in cash and stock and will assume $416 million in net debt from CH2M. Both companies expect to complete the transaction during the first quarter of Jacobs’ fiscal 2018. By acquiring CH2M, Jacobs will be able to further expand its global footprint in transportation, water, nuclear, petroleum, chemical and environmental fields.
At the tail-end of July shareholders at both DigitalGlobe and MacDonald, Dettwiler and Associates separately approved MDA’s acquisition of DigitalGlobe for $3.6 billion. Stockholders at both companies voted in favor of the acquisition, and MDA stockholders also voted in favor of electing three DigitalGlobe nominees as directors: Howell Estes, L. Roger Mason and Nick Cyprus. MDA also announced the other elected directors: Robert Philips, Howard Lance, Brian Kenning, Dennis Chookaszian, Eric Zahler, Lori Garver, Joanne Isham and C. Robert Kehler.
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