Last GTE Government Unit Gets Close Look

By Nick WakemanThe GTE Government Systems division still on the block will be chased by many industry players but go quickly, industry officials said. "We are very confident we'll have no problem finding a buyer," said Armen Der Mardersosian, GTE executive vice president of technology and systems. A sale of the Information Systems Division should be completed within three to four months, he said."There are at least 20 companies that fit our profile, and I expect at least half of them to express interest," he said.Der Mardersosian declined to be specific but sources reeled off a list of prospective suitors. They include: Advanced Communications Systems Inc. of Fairfax, Va.; Anteon Corp. of Fairfax; DynCorp of Reston, Va.; CACI International Inc. of Arlington, Va.; Federal Data Corp. of Bethesda, Md.; GRC International Inc. of Vienna, Va.; Logicon Inc. of Herndon, Va.; Litton-PRC Inc. of McLean, Va.; and TRW Inc. of Cleveland.The GTE unit, which has about 880 employees and provides telecommunications networking and systems integration services, is expected to generate $220 million to $250 million of revenue in 1999. Its business mix is 50 percent defense, 45 percent civilian and 5 percent commercial. "This unit will attract some significant attention," said John Allen of the investment banking firm Quarterdeck Investment Partners of Los Angeles. One executive whose company plans to bid on the division said its revenue size and skill sets would attract a great deal of attention. The executive, who spoke on the condition of anonymity, said the division could fetch an asking price of $170 million. His company, which did not bid on the three GTE Government units that General Dynamics picked up in its $1.05 billion deal, said: "This was the piece of business that always interested us."Another executive whose company also may bid called the GTE division a mixed bag. It has some low-tech contracts, and its skills are weighted more toward telecommunications than pure information technology services, the executive said."But it has critical mass, and it comes from a name organization, so it will sell," he said. However, General Dynamics "definitely got the jewels."GTE's other three government units will bring General Dynamics 6,200 employees and $1.2 billion in revenue. The acquisition will create a $2 billion IT unit with capabilities in information assurance, secure communications, defense electronics and intelligence."This was a very good strategic move for them," said Richard Knop of the investment banking firm Boles, Knop & Co., Middleburg, Va. "This gives General Dynamics a platform where the defense budget is growing."On the Block GTE Information Systems Division Chantilly, Va.Irv Zaks, vice president and general managerEstimated 1999 Revenue: $220 million to $250 millionEmployees: 880Business: Telecommunications, networking and systems integration services.Customers: Departments of Defense, Justice and State, FAAMajor Contracts: Defense Information Systems Network Management Support Services-Global/Network Engineering contract; Department of Transportation's Information Technology Omnibus Procurement II contract; National Institutes of Health's Chief Information Officer Solutions and Partners contract.Web Site: isd.gte.com