Startup pays $223 million for Getronics government unit
- By Patience Wait
- Oct 01, 2002
DigitalNet Inc., a Bethesda, Md., startup company, is acquiring Getronics Government Solutions, the U.S. subsidiary of the Dutch company Getronics NV, for approximately $223 million, the company announced Sept. 30. The purchase is expected to be complete in November, if approved by government regulators.
Getronics Government Solutions specializes in desktop and network management and solutions to the federal government. Because its parent company is foreign, the unit operated as an independent company with its own board of directors, even though it was 100 percent owned by Getronics.
"This is like winning the Triple Crown. It's a win-win-win for all parties," said Jeff Beck, chief executive officer for Getronics Government Solutions. "Getronics ... strengthens their balance sheet. For DigitalNet, they get the initial platform to build the business on. We finally get a parent interested in growing the business we know best, which is the federal government."
DigitalNet was started with $100 million in financing from GTCR Golder Rauner, a Chicago-based private venture capital firm. DigitalNet has just four employees, including Ken Bajaj as chief executive officer and Jack Pearlstein as chief financial officer.
Bajaj has more than a passing familiarity with much of Getronics Government Solutions. He was president of I-Net Inc., a network and desktop outsourcing company, which he sold to Wang Laboratories in 1996. Wang was then acquired by Getronics in 1999.
"In my mind, in the medium-sized companies this was the best platform available," Bajaj said of the Getronics purchase. The acquisition will serve as the platform company and be renamed DigitalNet, he said.
As for future acquisition plans, "for the time being we want to show strong organic growth, because I feel strongly that when you have organic growth, you create value for your shareholders," Bajaj said. "If in the process we need to acquire a niche technology that we don't have, I might go for it. ... I also want to go [after] commercial business as the market improves, so that we have a diversified portfolio."
Beck said Getronics employees have reacted positively to the news.
"It's always nice to find a way to motivate your employees. Typically this kind of announcement does just the opposite, but in this case they know the reputation of Ken Bajaj. ... He's come full circle in some respects," Beck said.