FALLS CHURCH, Va., March 18, 2018 /PRNewswire/ -- General
Dynamics intends to proceed with its tender offer to acquire all
outstanding shares of CSRA Inc. (NYSE: CSRA) for $40.75 per share in cash. General Dynamics
continues to believe that this combination creates a premier
provider of high-tech IT solutions to the Government Technology
Services market and that its proposed acquisition of CSRA offers
superior value for CSRA's shareholders.
On February 12, 2018, General
Dynamics and CSRA announced that they had entered into a definitive
agreement under which General Dynamics would acquire CSRA for
approximately $9.6 billion in cash,
including the assumption of $2.8
billion in CSRA debt. The tender offer for CSRA shares
commenced on March 5, 2018, and is
scheduled to expire on April 2, 2018,
at 11:59 p.m., New York City time, with the acquisition of
CSRA expected to close shortly thereafter. As previously disclosed,
the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act with respect to the tender offer has expired.
On March 18, 2018, CACI
International Inc announced an unsolicited offer proposing to
acquire CSRA for a combination of CACI common stock based on a
fixed exchange ratio of 0.184 shares of CACI stock for each share
of CSRA common stock and $15.00 per
share of cash. The offer implies current CSRA shareholders will own
approximately 55 percent of the resulting entity.
General Dynamics believes strongly that its proposed acquisition
of CSRA offers both superior and certain value for the CSRA
shareholders for the following reasons:
- We believe the nominal price of CACI's offer to CSRA overstates
the real value to the CSRA shareholders and understates the risk
attendant to it.
- CACI's offer is comprised of $15.00 per share of cash, less than 35 percent of
the purported value.
- Over 65 percent of CACI's proposed consideration consists of a
fixed exchange ratio of CACI stock, which is subject to daily
market fluctuations and an estimated four-month delay at a minimum
before its real value can be ascertained with certainty.
- CACI's nominal $44.00 per share
offer depends upon the all-time closing high share price of CACI's
volatile common stock.
- We believe that CACI's proposal would burden the resulting
entity with approximately $6.8
billion of debt, which would result in leverage of
approximately 5.7x debt to EBITDA, one of the highest in the
Government Technology Services sector.
- CACI's proposed offer would appear to be approximately 25
percent dilutive to CACI's GAAP earnings on a pro forma basis
pre-synergies and also dilutive to CACI's GAAP earnings on a pro
forma basis even assuming the elevated level of CACI's estimated
cost synergies.
- CACI's estimated synergies are, we believe, aggressive at
best.
- With CSRA shareholders owning 55 percent of the combined
company, CSRA will bear the burden of 55 percent of the termination
fee payable to General Dynamics as well as 55 percent of the
transaction expenses, which we estimate for CSRA alone at a total
potential after-tax cost of approximately $0.66 per share for each CSRA share. Assuming
CACI's transaction expenses approximate CSRA's, the estimated total
potential after-tax cost could be approximately $0.82 per share for each CSRA share.
- Based on CACI's statement that it could close the acquisition
of CSRA by July 31, 2018, the time
value of money for an investor between early April and the closing
of a CACI/CSRA combination would represent a significant
opportunity cost.
- Using the average trading price of CACI's stock over the past
30 trading days and taking into account the 55 percent of the
transaction expenses and termination fee to be borne by the CSRA
shareholders and the time value of money opportunity cost due to
the significant delay in the closing of a proposed CACI
transaction, we estimate the value of CACI's unsolicited offer to
be less than the General Dynamics offer.
- On this basis, we believe the CACI offer is inferior to our
cash offer of $40.75 per share even
prior to factoring in the significant market risk associated with a
CACI transaction closing many months in the future with a fixed
exchange ratio.
General Dynamics has a long history of successfully executing
acquisitions in a timely and efficient manner and firmly believes
that its offer is in the best interest of CSRA's shareholders,
employees and customers.
About General Dynamics
Headquartered in
Falls Church, Virginia, General
Dynamics (NYSE: GD) is a global aerospace and defense company that
offers a broad portfolio of products and services in business
aviation; combat vehicles, weapon systems and munitions; C4ISR and
IT solutions; and shipbuilding. The company's 2017 revenue was
$31 billion. More information is
available at www.generaldynamics.com.
Notice to Investors
This press release is
not a recommendation, an offer to purchase or a solicitation of an
offer to sell shares of CSRA stock. On March
5, 2018, Red Hawk Enterprises Corp., a wholly owned
subsidiary of General Dynamics ("Merger Sub"), commenced a tender
offer to purchase all of the shares of common stock, par value
$0.001 per share of CSRA, that are
issued and outstanding, at a price per share of $40.75, in cash, without interest and less any
applicable withholding of taxes. The tender offer expires at
11:59 p.m., New York City time, on Monday, April 2, 2018, unless extended. If the
tender offer is extended, we will inform the depositary of that
fact and will make a public announcement of the extension no later
than 9:00 a.m., New York City time, on the business day after
the day on which the tender offer was scheduled to expire. On
March 5, 2018, Merger Sub filed a
tender offer statement and related exhibits with the U.S.
Securities and Exchange Commission (the "SEC") and on the same date
CSRA filed a solicitation/recommendation statement with respect to
the tender offer. Investors and shareholders of CSRA are strongly
advised to read the tender offer statement (including the related
exhibits) and the solicitation/recommendation statement, as they
have been amended and may be amended from time to time, because
they contain important information that shareholders should
consider before making any decision regarding tendering their
shares. The tender offer statement (including the related exhibits)
and the solicitation/recommendation statement are available at no
charge on the SEC's website at www.sec.gov. In addition, the tender
offer statement and other documents that Merger Sub files with the
SEC are available to all shareholders of CSRA free of charge at
www.generaldynamics.com. The solicitation/recommendation statement
and the other documents filed by CSRA with the SEC are available to
all shareholders of CSRA free of charge at
www.CSRA.com.
Certain statements made in this press release, including any
statements as to future results of operations and financial
projections, may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, as
amended. Forward-looking statements include, among other things,
statements about the potential benefits of the proposed
transaction; the prospective performance and outlook of the
combined company's business, performance and opportunities,
including the ability to deliver more innovative, leading-edge
solutions; the ability of the parties to complete the proposed
transaction and the expected timing of completion of the proposed
transaction; as well as any assumptions underlying any of the
foregoing. Forward-looking statements are based on management's
expectations, estimates, projections and assumptions. These
statements are not guarantees of future performance and involve
certain risks and uncertainties, which are difficult to predict.
Therefore, actual future results and trends may differ materially
from what is forecast in forward-looking statements due to a
variety of factors. The following are some of the factors that
could cause actual future results to differ materially from those
expressed in any forward-looking statements: (i) uncertainties as
to the timing of the tender offer and the merger; (ii) the risk
that the proposed transaction may not be completed in a timely
manner or at all; (iii) uncertainties as to the percentage of
CSRA's shareholders tendering their shares in the tender offer;
(iv) the possibility that competing offers or acquisition proposals
for CSRA will be made; (v) the possibility that any or all of the
various conditions to the consummation of the tender offer or the
merger may not be satisfied or waived, including the failure to
receive any required regulatory approvals from any applicable
governmental entities (or any conditions, limitations or
restrictions placed on such approvals); (vi) the occurrence of any
event, change or other circumstance that could give rise to the
termination of the Merger Agreement; (vii) the risk that
shareholder litigation in connection with the proposed transaction
may result in significant costs of defense, indemnification and
liability; and (viii) other factors as set forth from time to time
in General Dynamics and CSRA's filings with the SEC, including
their respective Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q, as well as the tender offer statement,
solicitation/recommendation statement and other tender offer
documents that will be filed by General Dynamics, Merger Sub and
CSRA. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof.
All forward-looking statements speak only as of the date they
were made. General Dynamics and Merger Sub do not undertake any
obligation to update or publicly release any revisions to any
forward-looking statements to reflect events, circumstances or
changes in expectations after the date of this press
release.
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SOURCE General Dynamics