General Dynamics agrees to buy Anteon for $2.1 billion | VailDaily.com
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General Dynamics agrees to buy Anteon for $2.1 billion

FALLS CHURCH, Va. – Defense contractor General Dynamics Corp. moved to bolster its presence in the information technology market, announcing plans Wednesday to acquire defense and IT firm Anteon International Corp. of Fairfax for $2.1 billion.Under the deal, General Dynamics would pay $55.50 in cash for each Anteon share, a 36 percent premium over Anteon’s Tuesday closing price of $40.77. The overall deal is valued at $2.2 billion, including $100 million of net debt.Anteon shares rallied $13.31, or 33 percent, to $54.08 in afternoon trading on the New York Stock Exchange. General Dynamics shares were down 65 cents to $111.44 on the NYSE.General Dynamics, which makes nuclear submarines, tanks and command and control systems, said the deal would immediately 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 2006. Both companies’ boards of directors have already 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 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 Wednesday, Chabraja said 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,” Kampf said.Jon Kutler, chief executive of Jefferies Quarterdeck, the aerospace and defense unit of the New York investment bank Jefferies Group, said he believes the companies are a good fit and he would not expect the merger to result in significant layoffs.Kutler, who helped bring 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,” Kutler said.Vail, Colorado


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