General Dynamics to Buy CSRA for $9.6 Billion

Defense contractor General Dynamics Corp. (NYSE: GD) announced they are buying CSRA (NYSE: CSRA) for $9.6 billion, including the assumption of $2.8 billion in CSRA debt.

“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and chief executive officer of General Dynamics. “CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins.”

General Dynamics, the maker of the M1 Abrams tank and Gulfstream business jets, will acquire all outstanding shares of CSRA for $40.75 in cash.

We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies,” Mr.Novakovic added. “The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”

The company said they expect to complete the acquisition in the first half of 2018.

“Our combination with General Dynamics represents an excellent outcome for CSRA’s stockholders, employees and customers. It builds on strong shared values, culture and a passion for serving our customers’ missions,” Larry Prior, chief executive officer and president of CSRA. “We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”

The deal would make General Dynamics the largest provider of IT services to the Pentagon and other government agencies.

“I am very pleased to welcome CSRA’s talented leadership team and employees,” Mr. Novakovic continued. “This combination brings together two industry leaders with highly complementary capabilities to create a strong business with approximately $9.9 billion in revenue and double-digit EBITDA margins in the consolidating Government Technology Services sector.”