Computer Horizons acquires RGII Technologies

Computer Horizons Corp., a professional services company in Mountain Lakes, N.J., has entered the federal market with a $31 million deal to buy RGII Technologies Inc. of Annapolis, Md.

CHC officials announced the acquisition today. The deal includes an up-front payment from CHC of about $21 million and an adjustable note with a face value of $10 million payable over three years. The ultimate value of the note will be based on RGII's performance, according to CHC. RGII Technologies provides of IT solutions and program management services to federal, state and local government agencies

"We expect continued strong top-line growth from RGII, in the 15 percent range, and strong margins as well, which will provide for accretive contributions to our bottom line from day one," said William Murphy, president and chief executive officer of CHC.

RGII Technologies' expertise includes enterprise management, network infrastructure, information assurance and security, Web development and integration, and technical services. The company has more than 80 government customers, including the departments of State and Defense. RGII, which had more than $33 million in revenue in 2002, employs more than 350 people. A large percentage of its employees hold security clearances, and three RGII facilities carry either Top Secret or Secret clearances, according to CHC.

RGII Technologies will be a wholly owned subsidiary of CHC. Kathryn Freeland, founder and chief executive officer of RGII, will continue to manage the unit.

RGII Technologies will establish CHC as a player in the federal IT marketplace, Murphy said. In February, when Murphy released the company's financial results for 2002, he said the company was moving quickly to transition CHC from a predominately IT staffing company to a "vertically oriented global services and solutions company."

For 2002, CHC had revenue of $297.1 million, down 26 percent from the year before. Murphy said the company's IT Services Group and Chimes subsidiary, which provides e-procurement services, have been hurt by a weak economy, particularly the drop in IT spending in the financial services and telecommunications industries.

In a statement issued today, Murphy said that acquiring a federal IT services company has been a long-term priority for his company.

"While most experts agree that the overall IT services sector continues to face sluggish growth prospects as corporate technology budgets continue to be squeezed and offshore outsourcing of technology jobs continues, the federal government IT sector remains a very strong market," he said.