Falls Church defense contractor General Dynamics Corp. moved to bolster its presence in the information-technology market, announcing plans yesterday to acquire Fairfax defense and technology firm Anteon International Corp.
Under the deal, General Dynamics would pay $55.50 in cash for each Anteon share, a 36 percent premium over Anteon’s closing price on Tuesday of $40.77. The overall deal is valued at $2.2 billion, including $100 million of debt.
Anteon shares rose $13.25, or 32 percent, to close at $54.02 yesterday on the New York Stock Exchange. General Dynamics shares fell 41 cents to close at $111.68 on the NYSE.
General Dynamics, which makes nuclear submarines, tanks and command and control systems, said the deal immediately would boost its earnings. It expects to close the acquisition, which still needs approval from Anteon’s shareholders, by the end of the second quarter of next year. Both companies’ boards of directors already have approved the deal.
Anteon has a current business backlog of $6.6 billion and expects to bring in $1.72 billion in sales next year. The company designs systems for national defense, intelligence, homeland security and other government needs.
Almost 90 percent of Anteon’s $1.3 billion revenue in 2004 came from Defense Department contracts, the company said in its annual report.
Anteon employs 9,500, including 6,200 with security clearances. General Dynamics employs nearly 72,000 and had sales in 2004 of more than $19 billion.
General Dynamics Chief Executive Officer Nicholas Chabraja said Anteon significantly strengthens the company’s information-technology offerings to the defense, intelligence and homeland-security sectors.
In a conference call with analysts yesterday, Mr. Chabraja said the two companies are largely complementary and rarely compete directly with each other.
Anteon CEO Joseph Kampf said in the call that the deal will allow Anteon, as part of General Dynamics, to compete on an even playing field with some of the nation’s biggest defense contractors, like Lockheed Martin Corp.
“We’ll be able to look those companies right in the eye,” Mr. Kampf said.
Jon Kutler, chief executive officer of Jefferies Quarterdeck, the aerospace and defense unit of the New York investment bank Jefferies Group, said he thinks the companies are a good fit and that he would not expect the merger to result in significant layoffs.
Mr. Kutler, who helped bring Mr. Kampf to Anteon when it was formed in the mid-1990s, said the acquisition fits with General Dynamics’ long-term strategy of establishing a major presence in the high-growth areas of the Pentagon budget, like systems management.
“When Nick Chabraja came to General Dynamics, it was primarily a tank and submarine company, and he has completely transformed that,” Mr. Kutler said.