US: IT contractor buying Engility in US$2.5b all-stock deal

Reston, Virginia-based government IT contractor Science Applications International Corp. (SAIC) will acquire Chantilly-based Engility Holdings. It’ll create one of the largest government IT contractors in the country, with a combined revenue of US$6.5 billion, reported The Wall Street Journal.

According to the Journal, the planned deal will create the third-largest provider by revenue of information technology and related services to the Pentagon and other government agencies.

Tony Moraco, chief executive of SAIC, said on an investor call that the combined company would have the scale and workforce to bid on larger deals and a broader scope of work, notably with the intelligence agencies.

The Pentagon’s recently passed 2018 fiscal budget boosted procurement spending by almost 20% from a year earlier, while the 2019 budget carries a more modest 2% rise, with companies expecting it to flatten in the early 2020s.

Mr. Moraco said a combination would allow SAIC to take advantage of contract opportunities during the midpoint or tail end of the current budget uptick.

Full Content: The Wall Street Journal