General Dynamics Acquires CSRA

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General Dynamics Acquires CSRA

Sunil Grover, Managing Partner
sgrover@truebluepartners.com
(669) 900-4031

Deal Financials

Enterprise Value ($m): 9,705.1
EV / LTM Revenue: 1.9x
EV / LTM EBITDA: 11.5x

Transaction Overview

  • On Feb 12, 2018, global aerospace and defense giant General Dynamics announced its acquisition of CSRA, a leading government IT business providing next-generation technology solutions to federal customers.
  • With this transaction, General Dynamics demonstrates its focus on its Information Systems and Technology business unit, paying a 27% premium over CSRA’s 30-day average trading price.

CSRA’s Successful Turnaround Efforts

  • CSRA was formed in 2015 through the merger of CSC’s government services business and SRA, both of which had gone through separate turnaround efforts. Their coming together reflected a variety of market trends, including competitive pressures and the need for scale and cost efficiencies.
  • In recent years, CSRA has focused on new opportunities such as cloud systems integration in an attempt to double down on growing subsectors, winning a major $498 million ceiling contract for the Defense Department’s milCloud 2.0 program.
  • Early last year, CSRA completed its acquisition of NES Association, a well-respected federal IT services provider, as part of its efforts to become a leader in network transformation services.

General Dynamics’ M&A Strategy to Gain Scale

  • The combined entity would create an IT services business with over $9 billion in revenue and footprints across almost all sectors of government. This scale would place it right behind Leidos, which is $10 billion in annual revenue.
  • Two years prior to this transaction, Leidos, one of General Dynamics’ primary competitors, closed a $4.6 billion deal for Lockheed Martin’s IT business, creating the largest player in government-focused IT services.
  • On the same note, this deal came out at the same time as US President Donald Trump’s signing of a massive defense bill that would authorize about $700 billion for the Defense Department.

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About True Blue Partners, LLC
True Blue Partners is a boutique M&A advisory firm that serves lower mid-market enterprise software, service and solutions companies. It brings the rigorous strategic and financial perspective of bulge bracket firms with a company building approach and a steadfast partnership that only an independent boutique firm can deliver. For more information please visit www.truebluepartners.com or email us at info@truebluepartners.com

TBP was NOT an advisor to this transaction.