DynCorp entertaining suitors

DynCorp executives are considering merger and acquisition offers from a "few" companies, a DynCorp spokeswoman said.

The company told employees March 15 that the board of director's had given management permission to evaluate the offers, said Charlene Wheeless, vice president of corporate communications of the Reston, Va.-based company. In 2001, the company had about $2 billion in revenue.

DynCorp, which is employee owned, wanted inform its workers of the buyout potential before the company's quarterly trading day April 8, Wheeless said. Employees are only allowed to buy or sell the company's stock once a quarter.

The stock is valued at an all-time high of $46.25, and DynCorp officials were concerned employees would sell the stock and miss out on a potentially bigger payoff if the company is sold in the next few months, she said. A year ago, the stock was valued at about $31.

Wheeless declined to comment on who the potential suitors are. "The offers are serious enough to consider, but we haven't made a decision to merge or sell," she said.

The interest in DynCorp is not surprising, said Jerry Grossman, managing director of the investment banking firm Houlihan Lokey Howard & Zukin of McLean, Va. The firm helps DynCorp set its stock price.

The company's bottom line numbers are improving, and DynCorp has a large backlog of business. "They've really hit their stride," he said.

Grossman declined to speculate on who potential buyers of DynCorp would be, but said there are probably only about 20 companies worldwide that could buy the company, which provides outsourcing, information technology, engineering and technical services to defense and civilian agencies.

The government market in general is getting more attention from investors who are attracted to the market's steady growth, especially when compared to commercial sectors that are struggling, Grossman said .Companies in the government place have opportunities for attracting investors, being bought out or going public that did not exist in previous years, he said.

"I don't know of any company in DynCorp's sector that isn't considering something," Grossman said.

"A market environment like this only comes around once a decade," said Jon Kutler, president of Quarterdeck Investment Partners Inc. of Los Angeles. "Every company has to think about how they can take advantage of this market."