Public sector powerhouse CSRA amended its acquisition agreement with General Dynamics this week after the U.S. defense giant increased its all-cash offer from $40.75 per share to $41.25 per share.
As a result, the CSRA board of directors has determined the "unsolicited" $7.2 billion proposal submitted by rival solution provider CACI cannot "reasonably be expected to lead to a company superior proposal," according to a filing with the U.S. Securities and Exchange Commission.
The revised General Dynamics offer has an overall valuation of $9.7 billion, including the assumption of $2.8 billion in CSRA debt. CACI had made a $44 per share offer – comprised of cash equivalent to $15 per share and a 0.184 CSRA-CACI equity trade ratio – that would have given CSRA stockholders 55 percent ownership of the combined company.
The CSRA board, which is formally recommending stockholders to tender their shares pursuant to the General Dynamics offer, said it took multiple factors into account including "certainty of value, certainty of closing and speed to closing of the General Dynamics offer, as amended, as compared to the CACI proposal." The General Dynamics deal is expected to close in early April; CACI's estimated date of closure was July 31.
General Dynamics has a $66 billion market capitalization, compared with the $3.88 billion market valuation for CACI, No. 16 on the 2017 CRN Solution Provider 500.
CSRA, No. 14 on the 2017 CRN Solution Provider 500, has expertise in cybersecurity, big data analytics and digital enterprise platforms, among other areas. The company works with a slew of top vendor partners such as Amazon Web Services, Cisco Systems, Microsoft, Oracle and SAP.
The CSRA addition would make General Dynamics, which provides business jet, submarine, combat vehicle, communication systems and other tactical assets to the U.S. government, one of the country's largest federal solution providers. The aerospace and defense company has been planning to make CSRA part of its information systems and technology division, which delivers IT solutions to the U.S. Department of Defense, intelligence outfits and federal civilian agencies.
Arlington, Va.-based CACI also supports "national security missions" and government IT operations in defense, intelligence and federal civilian agencies.