PEC Buys Troy Systems, Bolsters Federal Business
- By Renae Merle
- Nov 21, 2001
PEC Solutions Inc. has acquired Troy Systems Inc. for $15.3 million in cash and $3 million in stock, giving the information technology company a foothold in the growing defense and health-care markets, the company announced Nov. 20.
The acquisition continues PEC's effort to diversify its presence in the federal sector, which provides 95 percent of its revenue. Troy's "experience in the defense and health-care IT sectors represents an important set of new vertical markets for PEC," said PEC president and chief executive David Kalgaard.
Troy's reach includes assisting the Army with automation of its health-care benefits and contracts with the State Department. The Fairfax, Va.-based company will report between $32 million and $33 million in revenue for 2001, almost entirely from work in the federal sector.
"This is an important and timely strategic move for both companies," said K. David Boyer, Troy's chairman and chief executive. "We are well positioned to support the missions of our government customers in creating a safer and more secure environment."
Fairfax-based PEC does business with several federal agencies, including the Drug Enforcement Administration and the Bureau of Alcohol, Tobacco and Firearms, for which it designed an intranet that allows employees from both agencies to share information.
PEC said it didn't expect to lay off any of Troy's workforce of more than 300. PEC also said it would pay $1.5 million to honor bonuses that Troy agreed to give some employees if the closely held company were ever sold.
Integration of Troy into PEC operations should take less than a year, particularly because the companies' client lists don't overlap, said Paul Rice, PEC's chief operating officer.
In October, PEC laid off about 40 of its 800 employees to compensate for a delay in a federal contract. The company said it expects to rehire the workers early next year.
PEC's stock price has increased since the September terrorist attacks, which raised expectations that federal information technology spending will increase. Also, government contractors are considered a safe haven for investors during an economic slump. The company's stock closed at $17.90 the day before the attacks, but it has gone over $30 recently.