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 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.
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.