16 December 2002 IT services company Computer Sciences Corporation (CSC) is to acquire military services specialist DynCorp in a $950 million (€929.8m) cash and stock deal.
CSC said the deal will strengthen its ability to bid for lucrative US government contracts, especially in supporting the new homeland security department established earlier in 2002 to prevent further terrorist attacks in the US.
DynCorp gets about half its $2.3 billion (€2.2bn) revenues from business related to the military. Its services include systems and network integration, global defence logistics and maintenance services and contingency support, homeland security services, and infrastructure management of critical defence assets.
CSC, which is based in California, said buying the Virginia-headquartered DynCorp will also give it a substantially expanded workforce and a beefed-up public-sector customer base.
DynCorp currently employs about 23,000 staff globally. These staff will join the 15,000 CSC employees at its Federal Sector division in Falls Church, Virginia.
The combined group will generate annual sales of about $6 billion (€5.9bn) from the federal government, according to Paul Cofoni, president of CSC’s Federal Sector division. CSC, which is taking on $273 million (€267.2m) of DynCorp’s debt, reported revenues up 9% to $11.4 billion (€11.2 billion) for the year to March 2002.
Meanwhile, there was better news for CSC’s embattled rival, EDS, which says it has signed a $4.5-billion (€4.4bn), 10-year managed network outsourcing contract with Bank of America. This deal is a timely fillip for EDS, which has suffered falling profits and has been the focus of an accounting investigation by the US Securities and Exchange Commission.