NEWTOWN, Conn. -- Only a handful of years after SAIC spilt into two (forming Leidos), BOTH firms have begun building mass via acquisitions. Leidos went first, buying Lockheed Martin's Information Systems & Global Services in 2016, which created the U.S.' top federal services provider. SAIC followed in late 2018 when it announced plans to acquire Engility, which was spun off from L3 Technologies. Even Engility itself has been building mass in the services marketplace having acquired defense contractor TASC in a deal worth $1.3 billion in 2015.
The newly merged company should begin business in early 2019 once all approvals are received. The operation will retain the SAIC name and headquarters. The combined firm will employ over 23,000 with annual sales estimated at around $6.5 billion.
This is just another in a spate of recent deals in this Federal services market space. General Dynamics Information Technology is currently in the process of digesting its $9.7 billion buy of CSRA made in April 2018. The new Perspecta was formed in June following a merger between DXC Technology’s U.S. public sector operations, Vencore and KeyPoint. This latest flurry of acquisition activity is being driven by increased defense spending by the Trump administration. A combination of stabilized federal spending, positive growth prospects, and is boding well for SAIC and the government services industry as a whole. To better capitalize on upcoming opportunities, contractors are pursuing a vigorous merger and acquisition strategy in order to have the scale needed to bid on big projects.
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