Mergers and aquisitions

SAIC plots course toward an IPO

Merger and acquisition experts are hailing Science Applications International Corp.'s decision to shed its employee-ownership model and conduct an initial public offering in 2006.

The move will give the company necessary cash for future acquisitions, experts said.

"It will make the company more competitive in the whole consolidation of the government information technology arena," said William Farmer with investment bank Jefferies Quarterdeck in Washington.

Proceeds from the so-far unpriced IPO will be used to pay a dividend to SAIC's stockholders.

The company is going the IPO route in part because of the rising cost of its employee-ownership structure.

"Over the past five years, we have used more than $2.5 billion of cash to balance our stock system," said SAIC Chairman and CEO Kenneth Dahlberg in a letter to employees. On Oct. 7, SAIC's board of directors will set the stock price for a limited order trade cycle.

Timing is good for an IPO, because industry valuations are at a relative high, said Larry Davis of merger and acquisitions advisory firm Aronson Capital Partners LLC of Rockville, Md.

"It's basically a reward-and-reload type of transaction," said Bob Kipps, with Los Angeles investment banking firm Houlihan Lokey Howard & Zukin. "They're rewarding existing shareholders with a special dividend, and reloading for future growth opportunities."

After the IPO, the company's shareholders will retain 80 percent to 90 percent of SAIC's capital stock and control all voting power, Dahlberg said in a video address to employees Sept. 2.

SAIC has about 42,400 workers and annual revenue of about $7.2 billion. The company ranks No. 3 on Washington Technology's 2005 Top 100 list, which measures federal contracting revenue.

SAIC also announced it is buying engineering and professional services provider Geo-Centers Inc. of Newton, Mass. Financial terms of the deal, which is expected to close this month, were not disclosed.

As part of the deal, SAIC also will acquire Geo-Centers subsidiaries EAI Corp. and FOCIS Associates Inc.

Geo-Centers provides research and development for chemical and biological weapons detection, infrastructure assessment and protection, life science research, rapid response equipment and support, and sensor systems and integration.

BEA to acquire portal solutions company

BEA Systems Inc. of San Jose, Calif., will acquire enterprise portal solution provider Plumtree Software Inc. for $200 million.

BEA will pay $5.50 cash per share and assume outstanding Plumtree options for a total of about $200 million. The transaction is expected to close this fall.

Plumtree of San Francisco offers portals to connect work groups, IT systems and business processes. Its cross-platform portal runs on Microsoft .Net and Java 2 Platform, Enterprise Edition.

Plumtree will become part of a new BEA product unit.

General Dynamics finishes Itronix purchase

General Dynamics Corp has completed its acquisition of wireless solution provider Itronix Corp. of Spokane, Wash., for an undisclosed amount.

Itronix provides mobile computing solutions, including handhelds, laptops and tablet PCs as well as wireless integration and support services for the military, public safety and commercial markets.

The company's 450 employees now will become part of General Dynamics C4 Systems of Scottsdale, Ariz. The division specializes in command and control, communications networking, space systems, computing and information assurance.

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