ITS jumps into M&A game

<@VM>M&A roundup

Thomas Sundling has been on both sides of deal making. As an executive at GTE Corp., he experienced that company's acquisition by General Dynamics Corp. While at GD, he helped engineer several deals ? including the blockbuster $1.5 billion acquisition of Veridian Corp. ? to help that company grow its IT business.

Now, as chief executive officer of ITS Corp. of Oxnard, Calif., he wants to build something of his own. Sundling took the reins of the 850-person company in April 2004 after equity capital group Riordan, Lewis & Haden bought it.

Last month, ITS announced its acquisition of Charis Corp., a San Bernardino, Calif., IT and engineering services company that specializes in environmental systems. Sundling said it is just the first of a wave of deals.

"We are going to be very aggressive but also very disciplined," he said. His targets include companies that have up to $30 million in annual revenue and provide IT and engineering solutions to the government, especially defense, intelligence and homeland security agencies.

Sundling also is looking for companies that have offices in the Washington area, close to customers and policymakers.

"To become a bigger player, you really need a presence in D.C.," he said.

ITS has been growing organically at a brisk pace. Its annual revenue rose over five years from $10 million to $60 million. Sundling said he wants 10 percent to 15 percent in organic growth as well as 25 percent to 30 percent growth from acquisitions.

By 2010, ITS likely will be a $500-million-a-year IT and engineering services company that will be positioned to go public, he said.

"One of the big challenges is making sure you have the right infrastructure and processes in place," he said. "If not, you can buy companies, and then have a lot of people all going in a lot of different directions."

Preventing that is where his experience at General Dynamics will come into play, Sundling said, as he applies what he learned under GD's Chairman and CEO Nicholas Chabraja and former GD Executive Vice President Ken Dahlberg, now CEO and president of Science Applications International Corp.

The IT unit Sundling managed at GD grew in five years from $60 million to $550 million, he said.
Alion picks up Carmel

Defense contractor Alion Science and Technology Corp., McLean, Va., has acquired Carmel Applied Technologies Inc., a developer and integrator of systems to produce 3-D visuals for flight simulators.

Terms of the deal were not disclosed, but the acquisition of CATI of Seaside, Calif., is designed to add to Alion's modeling and simulation resources.

CATI's XIG image-generation software offers an OpenFlight- and OpenGL-compliant image-generation system that can provide real-time visual and sensor displays of the outside environment.

Lockheed bids $463M for Sytex

Lockheed Martin Corp. of Bethesda, Md., is planning to buy defense IT provider Sytex Group Inc. for $462 million.

The deal is the first large acquisition Lockheed Martin has made since its $2.2 billion takeover of Titan Corp. of San Diego fell apart last year.

The sale also is a departure for Doylestown, Pa.-based Sytex, which had been growing steadily on its own. Founder Sydney Martin last year told Washington Technology that he had fielded numerous offers, but declined them because he felt the financial returns were better staying independent.

Sytex had about $425 million in 2004 revenue, nearly 50 percent above its 2003 results, according to Lockheed Martin.

Northrop makes deal for Integic

Northrop Grumman Corp. has signed a definitive agreement for an undisclosed sum to buy Integic Corp., a privately held, health and business process management company in Chantilly, Va.

The acquisition "will allow us to strengthen and broaden our offerings in enterprise health IT systems, human resources systems and business process management solutions," said Jim O'Neill, president of Northrop Grumman's IT sector.

Integic will be incorporated into O'Neill's division in McLean, Va. The transaction is expected to close in March or April. Citigroup Global Markets Inc. was Northrop Grumman's financial adviser on the deal.

Science Dynamics buys defense supplier

IP technology developer Science Dynamics Corp. has acquired for an undisclosed amount an 82 percent equity interest in Systems Management Engineering Inc. of Reston, Va.

More than 80 percent of SMEI's business is with the Defense Department, and about 10 percent of its business is with private companies that have contracts with the government, company officials said.

SMEI's Aquifer software is a DOD-certified application that creates and manages communications networks and real-time transaction processing.

Products from Science Dynamics of Pennsauken, N.J., include call control systems, calling cards, video-over-frame-relay devices and voice-over-IP gateways.

Lockheed closes Stasys deal

Lockheed Martin Corp. has completed its acquisition of network communications and defense interoperability consultancy Stasys Ltd. of Farnham, England. Terms of the deal were undisclosed.

Stasys specializes in tactical data-link integration, requirements management, modeling and simulation, and air traffic management consulting for defense and civilian customers. The company's capabilities complement Bethesda, Md.-based Lockheed Martin's portfolio of network-centric technologies, Lockheed Martin said.

The new organization, which will be called Lockheed Martin Stasys Ltd., will be a wholly owned subsidiary of Lockheed Martin UK Holdings Ltd. Lockheed Martin's integrated systems and solutions division of Gaithersburg, Md., will manage its operations.

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