Jim Garrettson
The past year has been a busy one for government contractors. The headlines have been filled with issues ranging from in-sourcing and de-conflicting to the surge of contractors that will be needed to support the effort in Afghanistan. This year has seen multiple multi-billion dollar deals that are changing the way companies within GovCon are structuring themselves. Topping out the merger and acquisition trends of 2009 is the computer and hardware provider purchasing “˜traditional' contracting companies to create specific vertically integrated companies. Comparing purchase price, EBITDA, employees impacted and general impact on the industry, ExecutiveBiz has compiled a list of the top mergers and acquisitions of 2009.
1. Oracle-Sun Microsystems: In April 2009, Oracle announced plans to purchase Sun Microsystems. This acquisition, worth an estimated $1.5 billion in additional revenue and for a total estimated purchase price of $7.4 billion, is at the top of our list. What makes this acquisition is the ability for Oracle to reticence Java and Solaris. Java is one of the most widespread cross platform computer programs, and the implications of Oracle ownership are immense. Recently, the European Union dismissed any anti-trust allocations giving the acquisition trading rites with Europe.
2. TASC; As of December 2009, TASC became an independent company. Northrop Grumman concluded the sale making TASC the first independent government contracting company that was once a part of a major government contracting firm. TASC is now considered to be de-conflicted and will look to use that asset in the pursuit of future contracts.
3. Xerox- Affiliated Computer Services: In September 2009, Xerox announced plans to purchase Affiliated Computer Services for $6.4 billion. With an estimated $1 billion in additional revenue this merger makes it to our number three spot. The merger between Xerox, whose dominance in the documentation technology, and ACS, Inc. whose specialty lies in automating work flow systems, puts Xerox in a prime position for domination in the documentation workflow systems.
4. Dell-Perot Systems: In September 2009, Dell announced plans to purchase Perot Systems for an estimated $3.9 billion. In December 2009, the merger was completed with Dell paying an unheard of 68% above the stock value of Perot Systems. This purchase moves Dell into the service industry and provides Dell with a valuable IT ally.
Richard Pineda, Vice President & General Manager of Dell Perot System's said “The Dell Services business – formed out of the powerful combination of Dell and Perot Systems – is an exciting step forward in our ongoing commitment to develop and provide best-value IT and business solutions for our customers.“
5. HP-3Com; In November 2009, HP announced plans to purchase 3Com networking gear maker for a reported $2.7 billion, in a deal that will generate an annual $1 billion in revenue. How does this telecom/ information system merger effect government contracting? The move will allow HP to simplify their network and improve on their delivery of IT services. The acquisition will also help HP to expand into Chinese markets, currently one of the fastest growing markets in the world.
6. Cisco-Tandberg; In an announced acquisition of $3.4 billion Cisco moves towards one of two announced acquisitions of 2009. Cisco will purchase all the outstanding shares of Tandberg for 153.5 Norwegian Kroner per share, for an aggregate purchase price of approximately $3 billion. Tandberg's leading video endpoints and network infrastructure solution will be integrated into Cisco's collaboration architecture. This will enable intercompany and multi-vendor interoperability and ease of use across the full product portfolio, ranging from desktop to immersive, multi-screen TelePresence.
7. ManTech International- Sensor Technologies; Announced in December 2009, ManTech International plans to purchase Sensor Tech for a reported $242 million. Company spokesman Stuart Davis estimated the EBITDA to be between 7 and 8 in 2010 alone. He also said that ManTech will be making more purchases and acquisitions in the future. This acquisition is not only the largest in history for ManTech, it also allows the company to receive more U.S. Army contracts due to the services acquired from Sensor Tech.
8. CA, Inc- NetQos; In November 2009 CA, Inc announced the acquisition of NetQos for a reported $200 million. NetQoS enhances CA's ability to help enterprise IT organizations and service providers deliver reliable, flexible, and cost-effective IT and business services. This acquisition will allow CA to add value to organizations challenged with delivering business-critical applications across increasingly complex network infrastructures
