General Dynamics wins the battle for CSRA

Continuing with the recent trend, technology companies are increasingly turning to consolidation phase to combat their rivals.  According to experts, the corporate world is in for bigger M&A deals in the coming months, both in terms of size and the number of transactions.

Fast-changing business trends and unpredictable market conditions prompt technology companies to pursue consolidation as a means to stay relevant. In order to expand their prowess in a particular area of operation, most players in the innovation-hungry industry bet on acquiring smaller but established companies with the required competence.

Leading aerospace contractor General Dynamics (GD) finally completed the acquisition of CSRA Inc. (CSRA) Tuesday, putting speculations to rest. The transaction, one of the biggest the corporate world has witnessed in recent times, marks the end of a fiercely-fought bidding war and establishes General Dynamics as a leading IT contractor for government projects.

Last week, rival bidder CACI International (CACI) bowed out after General Dynamics hiked its offer price from $6.8 billion to $9.6 billion, clearing the way for the latter to proceed with the takeover.

Additionally, the board of directors of CSRA had a natural leaning towards General Dynamics’ all-cash bid, against CACI’s cash-and-stock offer. Interestingly, there was an undisclosed third bidder in the fray. What made CSRA a lucrative target for multiple bidders is its advanced cloud-based IT services and a partner network comprising some of the top technology companies.

All along, General Dynamics maintained its aggressive stance as it does not want to miss out on any of the high-tech defense projects being proposed by the Trump administration as part of revamping the forces.

Last week, rival bidder CACI International (CACI) bowed out after General Dynamics hiked its offer price from $6.8 billion to $9.6 billion

Pursuant to the deal, CSRA will be integrated into General Dynamics’ information technology division. It is expected that the resultant synergies would contribute to the earnings and cash flow of the combined entity next year.

Now that CSRA has ceased to exist as an independent company, its shares will be delisted from the New York Stock Exchange. GD shares closed Tuesday’s regular trading session up 1% and continued to gain in the after-hours. CSRA stock made a modest gain towards the end of the session.