Publish Date : 03-Feb-2014
Engility Holdings, Inc. today announced it has completed the acquisition of Dynamics Research Corporation. DRC is a U.S. government services, information technology and management consulting firm with leading capabilities in Healthcare, Homeland Security, Research & Development, Intelligence, Surveillance & Reconnaissance (ISR), Financial Regulation & Reform, Defense Readiness, Logistics and Command, Control & Communications (C3).
Under the terms of the agreement, which was structured as a tender offer followed by a back-end merger, Engility acquired all outstanding shares of DRC's common stock for cash at a price of $11.50 per share and paid approximately $89 million to pay off existing debt, transactions fees and expenses. The transaction, which was financed through the $150 million accordion feature on Engility's existing credit facility, cash on hand and Engility's existing revolving credit facility, is expected to be accretive to Engility's 2014 earnings and significantly accretive to 2015 earnings and beyond. Engility will release fourth quarter and full year 2013 financial results and issue 2014 financial guidance on March 13, 2014.
Founded in 1955, DRC has a proven track record of supporting the government's highest priority programs in the science and engineering, IT, and technical and management consulting markets. DRC's broad portfolio of over 300 active contracts, with prime positions on key Department of Defense (DoD) and federal civilian agency Indefinite Delivery, Indefinite Quantity (IDIQ) contract vehicles, will expand Engility's addressable market and further diversify its customer base in the U.S. Air Force, U.S. Navy, Department of Health and Human Services, Department of Veterans Affairs, Department of Homeland Security, Intelligence Community, and other federal civilian and DoD customers. DRC has more than 1,100 employees, is a prime contractor on approximately 80% of its work, and has a track record of solid financial performance, with estimated revenue of $274-277 million and adjusted EBITDA of $24.3-24.7 million for 2013.
"By combining two leading pure-play government services companies that are extremely complementary in nature, we have created a stronger, more efficient organization to support our customers with a wider range of specialized technology and mission expertise. This compelling acquisition is consistent with our strategy to expand our addressable market, customer base and capabilities. In addition, it increases our access to additional key contract vehicles, adds scale to our business and diversifies our revenue base," said Engility President and CEO Tony Smeraglinolo. "We look forward to leveraging our low-cost business model to better serve DRC's long-standing customer base, and we are excited to welcome DRC's highly talented workforce to the Engility team."
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