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HERNDON, Va., Sept. 11, 2004. DigitalNet Holdings Inc. announced today that it has entered into a definitive merger agreement with BAE Systems North America. BAE Systems will acquire all of the outstanding shares of DigitalNet for $30.25 per share in cash. With the assumption of DigitalNet's $93.25 million of debt, the cost of the transaction would be approximately $600 million.
DigitalNet's capabilities will complement BAE Systems North America's significant presence in managed information technology and information assurance, and enhance its ability to address evolving U.S. national security priorities for network centric infrastructure and information sharing between the intelligence, homeland security and warfighting communities.
BAE Systems anticipates the acquisition will be accretive to earnings in the first year and will finance the transaction out of existing resources.
Headquartered in Herndon, Va., DigitalNet, which employs approximately 2,200 people primarily in the United States, is a leading provider of networked infrastructure and information assurance solutions to federal government agencies such as the Departments of Defense, Homeland Security, Justice, Treasury and State, as well as the national intelligence community. The company provides strategic consulting services, application development and integration, e-Government applications and strategies, and has experienced strong growth in web-based network centric applications.
Mark Ronald, president and CEO of BAE Systems North America, said, "The acquisition of DigitalNet is consistent with BAE Systems' strategy of acquiring profitable, growing businesses with strong, differentiated technologies that complement BAE Systems' already broad range of capabilities and bolster our ability to provide integrated systems and transformational solutions for our customers."
Ronald added, "I look forward to welcoming the highly regarded DigitalNet team and their market-leading technology into BAE Systems North America. Our two companies share common values, a similar heritage, and long histories of innovation and commitment to national security. Together we will be able to provide our federal and national security customers with more innovative products and solutions to meet their ever more demanding information systems and network centric requirements."
At DigitalNet, chairman and CEO Ken Bajaj said, "DigitalNet has continually delivered outstanding customer service to our customers through the commitment and integrity of our employees. The acquisition by BAE Systems not only provides significant value for our shareholders, but it enables DigitalNet to expand its ability to deliver complete IT solutions to a broader customer base after the acquisition. We will then be able to more aggressively pursue larger opportunities utilizing the combined capabilities of DigitalNet and BAE Systems, which provides a stronger future for our employees as well as broader offerings to our customers."
And Mike Turner, chief executive of BAE Systems said, "Our North American business currently accounts for more than 20 percent of group sales and profits, with 10 percent organic sales growth annually. It has a successful record of acquiring and integrating businesses that create and sustain value. The acquisition of DigitalNet will be an important step in enhancing the capability of BAE Systems North America to better serve its customers."
With the acquisition, BAE Systems North America will become a leading federal sector information technology provider, with revenues in that market exceeding $1.2 billion, the company said. The transaction has been approved by the boards of directors of both companies and is expected to close in the fourth quarter 2004, subject to certain government regulatory reviews and approvals.
Banc of America Securities LLC acted as financial advisor to DigitalNet to render a fairness opinion to the Board of Directors.
DigitalNet builds, integrates and manages enterprise network computing solutions that provide government organizations with sustainable strategic business advantages. With more than 30 years of experience, the company provides managed network services, information security solutions and application development services and solutions for the U.S. Department of Defense, government civilian agencies and the intelligence community. For more information, see www.digitalnet.com.
BAE Systems is an international company engaged in the development, delivery, and support of advanced defense and aerospace systems in the air, on land, at sea, and in space. The company designs, manufactures, and supports military aircraft, surface ships, submarines, radar, avionics, communications, electronics, and guided weapon systems. It is a pioneer in technology with a heritage stretching back hundreds of years and is at the forefront of innovation, working to develop the next generation of intelligent defense systems. BAE Systems has major operations across five continents and customers in some 130 countries. The company employs more than 90,000 people and generates annual sales of approximately $20 billion through its wholly owned and joint-venture operations.
BAE Systems North America is a high-technology U.S. company employing more than 26,000 people who live and work in some 30 states, the District of Columbia , and the United Kingdom generating sales of more than $5 billion. The company is dedicated to solving its customers' needs with highly innovative and leading edge solutions across the defense electronics, systems, information technology, and services arenas.
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