CACI is said to top General Dynamics bid for tech firm CSRA, WSJ says

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(Bloomberg) -- CACI International Inc. is offering about $7.2 billion for the information-technology company CSRA Inc. in a move designed to scuttle CSRA’s existing plan to tie up with defense giant General Dynamics Corp., the Wall Street Journal reported.

CACI’s offer is $44 in cash and stock for each CSRA share, exceeding the $40.75 a share all-cash deal that CSRA and General Dynamics agreed to in February, the Journal said, citing a person familiar with the situation. CSRA, based in Falls Church, Virginia, provides services such as cybersecurity and data analytics.

The competing bid sets up a David and Goliath contest in the Virginia suburbs of Washington, pitting Arlington-based CACI with its $3.88 billion market valuation against General Dynamics, a diversified defense company some 17 times its size. General Dynamics, also based in Falls Church, agreed to buy CSRA to expand its computer-services offerings for government agencies and military customers.

Lucy Ryan, a General Dynamics spokeswoman, declined to comment. CACI and CSRA didn’t immediately respond to calls for comment.

Potential Spoiler

If successful, CACI would foil the biggest-ever acquisition by General Dynamics, the maker of Abrams tanks and nuclear submarines whose previous largest deal was for business-jet maker Gulfstream almost 20 years ago.

The acquisition would have created a computer-services provider with $9.9 billion in sales, General Dynamics said. The combined companies would be the second-largest federal IT provider behind Leidos Holdings Inc. and ahead of Booz Allen Hamilton Holding Corp., according to a Feb. 12 General Dynamics presentation based on 2018 estimated revenues.

CSRA was formed in 2015 from the combination of SRA International with the government business of Computer Sciences Corp. The company is expected to have $5.4 billion of revenue in fiscal year 2018 ending March 31 and has about 19,000 employees, according to the presentation. Revenue is split in almost equal thirds among health and civil, defense, and intelligence.

CACI expects revenue to be as much as $4.5 billion for fiscal year 2018 that ends June 30. Tax reform will boost its net income by $100 million to as much as $283 million, the company said in a presentation following its latest earnings report, issued Jan. 31. The company’s organic sales have risen for four consecutive quarters as government contracts for IT work increase. The total backlog was $10.9 billion at the end of 2017.

On March 15, CACI said it was among 20 companies to win a Defense Information Systems Agency contract that could be as much as $17.5 billion over 10 years.

Bloomberg News