SAIC to Buy Rival Engility for USD 1.5 Billion

Published on: 10 Sep, 2018

Science Applications International Corp. (NYSE: SAIC) said on Monday it will acquire Engility Holdings, Inc. (NYSE: EGL) for USD 1.5 Billion in stock, a deal that will turn it into the second-largest independent U.S. government services contractor.

Engility shareholders will receive USD 40.44 in SAIC stock for each of their shares, an 11.5% premium to Engility’s closing price of USD 36.24 on Friday, the Companies announced. SAIC will assume USD 900 Million in Engility debt, giving the deal a total value of about USD 2.5 Billion.

On completion of the deal early next year, SAIC’s board will expand to 11 seats from 9, and SAIC shareholders will own about 72% of the combined Company.

Engility, based in Chantilly, Virginia, provides skilled personnel to the U.S. Departments of Defense, Homeland Security and Justice, among others. The acquisition will boost SAIC’s offerings to its space customers and expand its customer base in the intelligence community, SAIC Chief Executive Tony Moraco said in an interview.

Reston, Virginia-based SAIC, which has a market capitalization of USD 3.8 Billion and will have 23,000 employees on completion of the deal, will now be second in size only to Leidos Holdings Inc (NYSE: LDOS) among U.S. government service contractors. The combined company would realize about USD 75 Million in annual cost savings, Tony Moraco said during a call with shareholders on Monday morning.

Engility acquired privately held peer TASC in 2014 for about USD 1.1 Billion, including debt. At the time, TASC was controlled by private equity firms KKR & Co Inc. and General Atlantic LLC, who, combined, owned close to half of Engility.

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Austin Chiu

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