ACS Strengthens State and Local Foothold with SCT Purchase

Affiliated Computer Services Inc. will acquire the global government solutions business of Systems & Computer Technology Corp. for $85 million in cash, ACS of Dallas announced June 25.

With this acquisition, ACS will increase its state and local business by about 25 percent and become a major provider of outsourcing and IT services to state and local governments, analysts and company officials said.

SCT of Malvern, Pa., has about 800 employees in its government solutions business located in Lexington, Ky. The unit generates about $85 million of the company's $400 million annual revenues, the company said.

ACS' state and local government business generates about $300 million of the company's reported $1.9 billion in annual revenues, said Tom Meagher, vice president of equity research at BB&T Capital Markets, Richmond, Va.

The sale of its government business will improve service to SCT's former clients and allow SCT to focus on its core competencies in the education, utilities and process manufacturing markets, said Mike Emmi, SCT's chairman and chief executive officer, in the announcement.

ACS could not be reached for comment.

The acquisition will make ACS the largest outsourcing contractor in local government based on the number of signed contracts, said Tom Davies, senior vice president at Current Analysis Inc., Sterling, Va.

The acquisition will expand ACS' software business in the state and local government market by providing it with a larger customer base and a richer portfolio of offerings that will now include criminal justice in addition to finance and human services, he said.