M&A roundup

SAIC's Ken Dahlberg

Sandy Huffaker

SAIC ponders IPO to fund acquisitions

Science Applications In-ternational Corp. of San Diego is considering changing its long-standing tradition of employee ownership to sponsor an initial public offering to raise cash for acquisitions.

"The board is evaluating improvements to our capital structure, including taking on additional debt, increasing purchases of stock by employees and raising capital and providing stockholder liquidity through an initial public offering or private placement of our stock," Chief Executive Officer Kenneth Dahlberg wrote in an interoffice memorandum June 6. The three-page memo is attached to the company's 10-Q form filed on that date.

Driving the need to evaluate such alterations is the consolidation in the defense and homeland security IT solutions markets. For example, defense contractor L-3 Communications Inc. recently agreed to buy Titan Corp. for $2.65 billion in cash and assumed debt.

"Completing strategic acquisitions will be increasingly important to our company's future as our competition consolidates into fewer and more formidable companies, more aggressively targeting our market space," Dahlberg wrote in the memo.

In March, SAIC completed the sale of the Telcordia Technologies division, which had been a large portion of SAIC's commercial sales. Recent acquisitions include ProcureNet Holdings Inc., a procurement technology firm in Fairfield, N.J., with annual revenue of $250 million; as well as Fairfax, Va.-based Presearch Inc. and Trios Associates Inc.

The $7.2 billion company is one of the Pentagon's top 10 largest prime contractors. SAIC ranked No. 3 on Washington Technology's 2005 Top 100 list of federal prime contractors.

L-3 Communications to buy Titan

L-3 Communications Inc.'s planned purchase of Titan Corp. for $2.65 billion will push it into the top 10 of Washington Technology's Top 100 list of federal prime contractors. For details, see page 10.

Sun buys into storage market

Sun Microsystems Inc. will buy Storage Technology Corp. of Louisville, Colo., for $4.1 billion.

The global market for magnetic and optical storage materials will double to $40 billion in 2010, according to a report from research firm Business Communications Inc., Norwalk, Conn.

But most of the projected growth is in optical media, the study showed, and Storage-Tek's focus is on magnetic media, which is expected to rise from $7 billion in 2005 to $9 billion in 2010.

SRA makes move for Galaxy

SRA International Inc. is planning an all-cash acquisition of Galaxy Scientific Corp., an Egg Harbor Township, N.J., company that provides systems engineering, information technology and tactical communications services and solutions to the federal government.

The value of the deal was not disclosed, but Galaxy had about $90 million in revenue for the year ended April 3.

The deal should close by late June or early July.

Lawson to merge with Intentia

Lawson Software Inc. and Intentia International AB will combine in an all-stock transaction valued at $480 million, with Lawson issuing about 81 million shares of its common stock to finance the transaction.

Lawson's stockholders will own about 57 percent and Intentia's stockholders will hold about 43 percent of the combined company.

ManTech closes Gray Hawk deal

ManTech International Corp. completed its $100 million acquisition of intelligence systems provider Gray Hawk Systems Inc., Alexandria, Va.

The acquisition will expand Fairfax, Va.-based ManTech's footprint in the intelligence community and the Defense Department.

Gray Hawk Systems is a privately held technology company that specializes in critical infrastructure protection, counterintelligence and counterterrorism support, and warfare systems engineering. It has 500 employees.

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