General Dynamics Acquires CSRA for $9.6 Billion

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Global aerospace and defense firm General Dynamics is set to acquire CSRA for $9.6 billion, creating a powerful high-end IT solutions partnership.

The GDIT and CSRA partnership will have a combined revenue of around $9.9 billion and strong double-digit EBITDA margins. The partnership expects to generate run-rate pre-tax cost synergies of approximately 2 percent of combined sales by 2020.

General Dynamics will acquire all outstanding shares in CSRA for $40.75 in a transaction valued at $9.6 billion, which includes the assumption of $2.8 billion in CSRA debt. General Dynamics says it plans to fund the transaction through a combination of available cash and new debt financing, and it anticipates retaining strong credit ratings with net debt of around $10.5 billion.

Based in Falls Church, Va., General Dynamics offers a broad portfolio of products and services including business aviation; combat vehicles, weapon systems and munitions; C4ISR and IT solutions; and shipbuilding. Revenue last year was $31 billion.

CSRA is a leading government IT business, providing next-gen solutions to federal customers. Its solutions are organized into six service areas: cyber; data and analytics; digital platforms; digital services; enterprise business services; and intelligent business process services. Its FY2017 (March) revenue was $5 billion.

“CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins,” said Phebe Novakovic, chairman and chief executive officer of General Dynamics. “We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies. The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”

Larry Prior, chief executive officer and president of CSRA, said, “Our combination with General Dynamics represents an excellent outcome for CSRA’s stockholders, employees and customers. It builds on strong shared values, culture and a passion for serving our customers’ missions. We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”

Stone Key Group, LLC served as exclusive financial advisor to General Dynamics and Jenner & Block LLP served as legal counsel. Evercore and Macquarie Capital served as financial advisors to CSRA and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel.

General Dynamics and CSRA executives discussed the transaction in a webcast this morning. The webcast of the conference call will be available on the General Dynamics website www.generaldynamics.com, and the CSRA website, www.CSRA.com.

The Government Technology & Services Coalition's Homeland Security Today (HSToday) is the premier news and information resource for the homeland security community, dedicated to elevating the discussions and insights that can support a safe and secure nation. A non-profit magazine and media platform, HSToday provides readers with the whole story, placing facts and comments in context to inform debate and drive realistic solutions to some of the nation’s most vexing security challenges.

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