CSC to sell parts of DynCorp
- By Roseanne Gerin
- Dec 13, 2004
Computer Sciences Corp. has entered into a definitive agreement to sell selected DynCorp business units for $850 million to private equity investment group Veritas Capital Management LLC, CSC said today.
The El Segundo, Calif., contractor will sell its DynCorp. International and DynMarine units along with selected DynCorp Technical Services contracts to Veritas of New York Of the $850 million, Veritas will pay $775 million in cash at closing plus $75 million in senior preferred stock.
DynCorp International, combined with the other units being divested, provides Defense Department aviation maintenance; physical and personal security services; drug eradication services; and shipboard logistics, training and staffing services to the federal government and international clients.
The units being sold employ approximately 14,000 workers worldwide and had combined revenue of $1.6 billion for the 12 months ended Oct. 1. The deal is expected to be completed during CSC's fiscal quarter ending April 1, 2005.
CSC bought DynCorp in March 2003 for approximately $914 million. The business units included in this transaction represented about 37 percent of total DynCorp revenue of more than $2.5 billion at the time of the DynCorp acquisition. With the new transaction, CSC is divesting about 23 percent by dollar volume of its federal government pipeline of business.
The deal will let CSC continue to concentrate on providing core information technology, engineering and professional services to the federal government, as well as supply additional capital resources, said Van Honeycutt, CSC's chairman and chief executive officer.
CSC expects to record a non-recurring, pre-income tax gain of more than $400 million. The company may use the $775 million cash, minus transaction costs, to pay off debt, repurchase CSC common shares, fund acquisitions and pay for other general corporate purposes, the company said.
CSC is No. 3 on Washington Technology's 2004 Top 100 list of federal contractors, ranked according to their prime IT contracting revenue. The company employs approximately 91,000 workers and had revenue of $14.8 billion for the fiscal year ended April 2.