Jacobs bolsters IT business with $59M deal for TechTeam

Jacobs Engineering Group Inc. will buy TechTeam Government Solutions Inc. in a $59 million cash deal that brings new customers and capabilities, the company said.

The transaction has been unanimously approved by the board of directors of the parent company, TechTeam Global Inc., and is expected to close in the third quarter of 2010, subject to the satisfaction of various closing conditions, TechTeam said in an announcement June 4.

Jacobs, with annual revenues of nearly $11 billion, is a provider of technical, professional, and construction services.

The acqusition of TechTeam's government business "enhances our IT capabilities and services for our clients around the globe. This acquisition allows us to drive greater growth in our business," said Craig Martin, Jacobs president and CEO.

The acquisition is the second government IT related acquisition by Jacobs in just over six months. In December, it acquired Tybrin Corp., a professional services firm that does mission planning, systems engineering, software development, modeling and combat environment simulation and other services for the U.S. government. Terms of the deal were not disclosed.

TechTeam's government customers include the Homeland Security Department, Army and Army Corps of Engineers. The 500-person business has capabilities in systems integration, enterprise application integration, ERP implementation support, IT infrastructure support, network operations management and call center operations.

Being part of a larger company with a stronger focus on the government market will help TechTeam Government Solutions compete more effectively and offer its customers more services, said David Kriegman, president of TechTeam Government Solutions.

For the rest of TechTeam, the sale "represents a significant step in realizing our strategic plan for the company,” said Gary Cotshott, president and chief executive officer of TechTeam Global. “Our focus will now be squarely on the commercial market, delivering leading IT outsourcing and business process outsourcing services to our global customer base.”

Cotshott added that TechTeam has been positioning its commercial business for growth and profitability on a post-divestiture basis through recently completed restructuring actions and through the investments made in service capabilities, geographic coverage and demand generation.

“The decision to sell TechTeam Government Solutions Inc. resulted from the board’s evaluation over the past year of various strategic alternatives to reposition the company for stability and growth,” said Seth Hamot, chairman of the board of directors of TechTeam Global.

He said the board had concluded that focusing TechTeam Global’s efforts on the attractive commercial market would be the right course of action for the company and its shareholders.

“This transaction will provide the company with significant financial flexibility which will enhance our more focused business efforts. We intend to use the proceeds from the sale initially to eliminate our bank borrowings and increase our cash position.” Hamot added.

The transaction is also subject to approval by the stockholders of TechTeam Global, and a special meeting of TechTeam Global’s stockholders is anticipated to be held during the third quarter of 2010.

Jacobs Engineering Group, of Pasadena, Calif., ranks No. 20 on Washington Technology’s 2010 Top 100 list of the largest federal government prime contractors.