Federal Network Integrator DigitalNet Acquired For $600M

Announced over the weekend, London-based BAE said the acquisition will involve its acquiring $93.25 million of DigitalNet debt with BAE, while also paying more than $500 million in cash for the Virginia-based firm's outstanding stock. DigitalNet has 2,200 employees and none are expected to be laid off because of the acquisition, the firms said.

DigitalNet provides networked infrastructure and information assurance solutions to federal government agencies, including the Departments of Defense, Homeland Security, Justice, Treasury, and State, as well as to U.S. intelligence agencies. Defense Department contracts make up more than 35 percent of the firm's revenue last year, and another 20 of the firm's contracts are with intelligence agencies.

"Our two companies share common values, a similar heritage, and long histories of innovation and commitment to national security," said Mark Ronald, president and CEO of BAE Systems North America, in a statement. "Together we will be able to provide our federal and national security customers with more innovative products and solutions to meet their ever more demanding information systems and network centric requirements."

The acquisition is in line with the trend in which smaller federal government IT contracts are increasingly being consolidated into larger contracts. The acquisition, said DigitalNet's chairman and CEO, Ken Bajaj, will facilitate DigitalNet in its ability to deliver complete IT solutions to a wider customer base.

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BAE will buy out DigitalNet at $30.25 a share, a healthy premium from its Friday closing price of $23.56 a share.

*This story courtesy of TechWeb.com.