Troubled Government Integrator GTSI Acquired By Unicom

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Government-focused systems integrator GTSI will be acquired by Unicom Systems in a transaction worth about $76.7 million, the two solution providers said Monday.

The agreement is a cash tender offer at about $7.75 per share -- a nearly 50 percent premium over GTSI's closing stock price on May 5 -- and has been unanimously approved by a special committee of GTSI directors as well as GTSI's board of directors, according to GTSI.

The deal is expected to close in the third quarter of 2012, though GTSI is permitted to solicit other acquisition proposals through June 6.

[Related: VAR500 M&A: 20 Channel Acquisitions Worth Watching]

Sterling Phillips, GTSI president and CEO, said the offer represented an "attractive opportunity" for GTSI's shareholders.

"I am excited about the potential for future growth with a strategic partner of Unicom's stature and global reach. There is an excellent opportunity to realize short- and long-term benefits for our customers, employees and OEM partners," Phillips said in a statement.

The past few years have been a rocky road for GTSI, which named Phillips its president and CEO in December 2010 following the forced resignation of former chief executive Scott Friedlander.

GTSI in October 2010 had its federal contracting ability suspended by the U.S. Small Business Administration over allegations it had violated rules intended to benefit small businesses.

Friedlander's exit was required by the SBA for lifting GTSI's suspension; he later became CEO of Paragon Technology Group, a Vienna, Va.-based solution provider.

GTSI has also seen significant financial shortfall. For the year ended December 31, 2011, it reported revenue of about $357 million, a decline of more than 46 percent from the previous year's $666.7 million.

GTSI was ranked No. 38 on CRN's 2011 VAR500 listing, an annual channel ranking since renamed the Solution Provider 500. Raymond James & Associates acted as financial advisor to GTSI during its acquisition by Unicom.

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