By Everdeen Mason
Engility Holdings Inc. (EGL) agreed to acquire fellow government
contractor Dynamics Research Corp. (DRCO) for $120.9 million as
Engility looks to position itself in new, higher-end markets.
Engility will offer Dynamics holders $11.50 a share, a 59%
premium over Friday's close of $7.25. The company's shares haven't
exceeded the offer price since February 2012.
Dynamics--a provider of information technology services in
health care, homeland security, intelligence, research and
development and more--has 300 active contracts within organizations
such as the Department of Defense. The company has more than 1,100
employees and an estimated annual revenue of $274 million to $277
million for 2013.
"This acquisition is consistent with our strategy to expand and
diversify our services offerings and presence with adjacent
customers," said Engility CEO Tony Smeraglinolo. The deal will
position Engility in new, higher-end markets, he added.
The deal, expected to close in the first quarter, will
immediately add to Engility's 2014 earnings and significantly boost
earnings in 2015 and on.
Engility is a government services contractor that specializes in
technical consulting, program and business support, supply chain
services and more. Like many government contractors, the company's
bottom line has been impacted by lower contract funding and delays
due to the federal budget crisis.
Engility's shares closed Friday at $32.00, with the stock up 66%
year-to-date. As of Friday's close, Dynamics' shares were up 24%
year-to-date. Neither was active premarket.
Write to Everdeen Mason at everdeen.mason@wsj.com
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