Updated: General Dynamics to buy Veridian
- By Patience Wait
- Jun 09, 2003
General Dynamics Corp.'s plan to acquire Veridian Corp., announced today, will provide an immediate benefit to the company's information technology operation, according to the executive charged with handling the $1.5 billion deal.
"There's lots of capabilities at Veridian," said Kenneth Dahlberg, executive vice president and group executive for General Dynamics Information Systems and Technology.
"We're not acquiring brick and mortar; we're acquiring leading-edge technology, a breathtaking presence in markets I don't have. And it's all about people; they're a great group of people, the cultures are very much the same, they were built from a series of acquisitions, high ethics ? just what General Dynamics has," he said.
The purchase is expected to close by Sept. 30, Dahlberg said.
General Dynamics will take its time, as much as six months to a year, before doing any reorganization to integrate the two businesses, but "I see more collaboration occurring across my businesses," he said.
Selling the company to General Dynamics "certainly was not something we had to do, but General Dynamics recognized what we would [contribute]," said David Langstaff, president and chief executive of Veridian.
When General Dynamics made the offer, the board of directors "believed the offer needed to be considered seriously [and that] it was in the shareholders' best interest."
Langstaff will stay on board for a period of time to assist in the transition, but then will leave the company, he said.
"It's a complementary customer base, and you figure that the transaction probably will bring more firepower to Veridian and what it could do for its base," said Howard Rubel of Soundview Technology Group, Greenwich, Conn.
The two companies signed a definitive agreement that calls for Falls Church, Va.-based General Dynamics to pay $35 a share for each outstanding Veridian share. General Dynamics will also assume $270 million in Veridian debt.
Veridian of Arlington, Va., founded several years ago, has made a series of acquisitions of its own and went public last year. This morning its shares soared more than 26 percent, closing today at $34.48, up from $27.35 at Friday's close. General Dynamics shares closed at $67.19, down about 2 percent from Friday.
Veridian is expected to have $1.2 billion in revenue in 2003 and has a contract backlog of $2.6 billion. General Dynamics said it expects Veridian's 2004 revenue to be $1.4 billion.
"This certainly expands [General Dynamics'] IT operation, which should be over $6 billion in sales next year. It's a good acquisition," said Paul Nisbet of JSA Research.
Veridian's capabilities include network security and enterprise protection; intelligence, surveillance and reconnaissance; knowledge discovery and decision support; information systems development and integration; chemical, biological and nuclear detection; network and enterprise management; and large-scale systems engineering expertise. More than 75 percent of Veridian's employees hold national security clearances.
In 2002, General Dynamics reported that its Information Systems and Technology Group had $3.7 billion in revenue. Overall, General Dynamics reported $13.8 billion.