Veritas Capital closes the first of two acquisitions that will grow the size of its portfolio company Peraton by roughly 7 times.
Number one in a pair of transactions that will create a new privately-held government technology company of at least $7 billion in annual revenue has completed.
Private equity firm Veritas Capital said Monday it has closed its $3.4 billion cash acquisition of the Northrop Grumman IT and mission support services business, which is being folded into Veritas portfolio company Peraton.
Peraton is adding around $2.3 billion in revenue from last year based on figures Northrop has released. This deal alone would push Peraton into $3 billion in size.
But Veritas has more plans for Peraton through the former’s announcement Wednesday that it will pay $7.1 billion cash to acquire Perspecta, which also will fold into Peraton.
That second deal slated to close in the first half moves Peraton further up the scale food chain to between $7.5 billion and $8 billion in annual sales.
For Northrop, the sale of IT services will bring to them $2.5 billion in net proceeds. Northrop subsequently revealed in a regulatory filing Monday that it reached an agreement with Goldman Sachs to buy back up to $2 billion in stock.
Northrop is eyeing $3 billion in share repurchases this year. The portion covered in the deal with Goldman Sachs covers a purchase of 5.9 million shares on Tuesday at the Jan. 29 closing share price of $286.61.
During Northrop's fourth quarter earnings call Thursday, the company reported generating $4.3 billion in cash from operations last year on top of the $2.5 billion being fetched from the IT services divestiture.
Close to $2 billion in debt paydowns are planned for this year, though Northrop CEO Kathy Warden told investors Thursday that "selective" acquisitions could be an option.
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