FDC Aims for Big League With Acquisitions
FDC Aims for Big League With Acquisitions By Bob Starzynski Staff Writer Federal Data Corp. is close to becoming a household name in the government information technology industry thanks to four acquisitions in the past year, including two in the past several weeks. Just last week, the privately held Bethesda, Md.-based company said it will buy Telos Information Services from Telos Corp. of Ashburn, Va., for an undisclosed price. On Feb. 19, the company purcha
FDC Aims for Big League With Acquisitions
By Bob Starzynski
Staff Writer
Federal Data Corp. is close to becoming a household name in the government information technology industry thanks to four acquisitions in the past year, including two in the past several weeks.
Just last week, the privately held Bethesda, Md.-based company said it will buy Telos Information Services from Telos Corp. of Ashburn, Va., for an undisclosed price. On Feb. 19, the company purchased ROW Sciences Inc. of Rockville, Md., for an undisclosed price.
Headquarters: Bethesda, Md. Founded: 1969 CEO: Daniel Young 1997 nine-month revenue: $309 million* 1996 annual revenue: $332.8 million* 1997 nine-month net earnings: $1.8 million 1996 annual net loss: $2.5 million *Pro forma figures |
Source: Securities and Exchange Commission filings |
The market's demand that federal IT players become larger to succeed makes the connection between FDC and Carlyle an appropriate one.
Carlyle, which became FDC's largest stockholder in 1995, is a $1.3 billion merchant bank that has amassed a series of successes in the IT and defense markets, while maintaining a low profile. Many of the group's holdings - including Howmet Corp., GDE Systems Inc., Vought Aircraft Co. and Magnavox Electronic Systems Co. - have been sold to such larger companies as Hughes Electronics Corp., Tracor Inc. and Northrop Grumman Corp. Most recently, BDM International Inc. of Mc- Lean, Va., of which Carlyle owned 25 percent, was sold to TRW Inc. of Cleveland for $1 billion.
"Carlyle has an uncanny ability to buy a company, make it beautiful and sell it for a premium," said one investment banker who is familiar with the organization.
There is no indication the Carlyle Group is seeking a buyer for FDC. But its strong Wall Street ties, which can give a company financing to make deals, is certainly helping FDC round up some large acquisitions.
The Carlyle Group has sponsored more than $5 billion in mergers, acquisitions and other corporate investments and has acquired real estate assets exceeding $1.3 billion since its founding in May 1987. Frank Carlucci, a former secretary of defense, is chairman of the group.
Last summer, FDC bought NYMA Inc. of Greenbelt, Md., for $29.5 million. One month later, it bought Sylvest Management Systems Corp. for $40.4 million. Another month after that, it received $105 million through a private placement debt offering.
"Management expects to continue to pursue strategic acqui-sitions, which it believes can contribute significantly to the company's future business growth," read an SEC filing the company released in December. According to the filing, Carlyle maintains an 80 percent voting interest in FDC.
The ROW acquisition fits nicely for FDC, observers said.
"[FDC's] other acquisitions made them reseller heavy," said one investment banker. "ROW fills in the holes."
"Sylvest gave FDC expanded product capabilities," Loomis said. "NYMA gave them higher-end engineering. This gives them a good foundation in the life and health sciences."
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