Logicon Chalks Up Buy No. 2: Sterling Federal
SEPT. 18 - Northrop Grumman Corp.'s Logicon unit is buying Sterling Federal Systems Group for $150 million in cash from Sterling's parent, Computer Associates International Inc. of Islandia, N.Y.
By Nick Wakeman, Senior Editor
SEPT. 18 - Northrop Grumman Corp.'s Logicon unit is buying Sterling Federal Systems Group for $150 million in cash from Sterling's parent, Computer Associates International Inc. of Islandia, N.Y.
The acquisition is the second major deal in as many weeks for Logicon of Herndon, Va. The company announced Sept. 6 it was buying Federal Data Corp. of Bethesda, Md., for about $302 million in cash and debt assumption.
Both deals still must clear regulatory hurdles, but the transactions are expected to close in the next 45 days.
With the acquisition of Sterling, Logicon is picking up complementary skills and new customers, said Herbert Anderson, president and chief executive of Logicon.
"It is a good fit for us in a number of areas such as high-performance computing, document management, satellite data collection, command and control systems, and modeling and simulation," he said.
Sterling Federal had about $159 million in 1999 revenue and brings new customers at the Federal Aviation Administration and several intelligence agencies.
Anderson said about 25 percent of Sterling's business is with intelligence agencies and another 20 percent is in air traffic control systems.
"When we put our technology and services together with what they have, we should be able to go after several things we couldn't before," he said.
The FDC and Sterling acquisitions will push Logicon over the $2.1 billion level in annual revenue. In 1999, Logicon pulled in $1.44 billion.
And the deal-making might not be done.
"We continue to look at opportunities that are out there," Anderson said. "We have shown we are serious about acquisitions."
Logicon's parent, Northrop Grumman of Los Angeles, sees information technology services as an important growth area for the company. The recent acquisitions are "yet another example of our strategy to focus on our high-growth business areas," said Kent Kresa, Northrop Grumman chairman, president and CEO.