SAIC Announces Agreement To Buy Scitor Corp. In $790M Cash Deal

SAIC revealed it will acquire Scitor Corp. in a $790 million deal that is expected to close in May.

The deal fills a glaring hole in SAIC, as the McLean, Va.-based federal integrator has been looking to replenish the intelligence side of its business since it split off from Leidos in September 2013, and did not take much of the intelligence side of the company with it.

By buying intelligence market-leader Scitor from private equity firm Leonard Green & Partners in a nearly $800 million all-cash deal, SAIC said it gains approximately 1,500 highly skilled employees, 90 percent of whom hold advanced-level security clearances with the government. This is the first acquisition the government IT company has made since the split.

[Related: Leidos Lands U.S. Counterterrorism Director As New EVP Of Business Development, Strategy]

"The acquisition of Scitor unites two great companies with premier workforces making a profound difference for customers," said SAIC CEO Tony Moraco in a statement. "Scitor is a recognized market leader with long-standing customer and industry relationships within the intelligence community and is aligned with SAIC's market expansion strategy. Operating as one company represents an opportunity to create shareholder value by gaining access to new customers, and leveraging capabilities from both companies to increase revenues and earnings."

Scitor garnered nearly $600 million in revenue in the last fiscal year, giving SAIC a total annual revenue of about $4.5 billion and about $321 million in earnings. With the two companies now joining forces, they'll have a total employee population of roughly 14,500. Less than two years after splitting off from Leidos, SAIC is now a direct competitor to the company in the intelligence space.

"The blending of Scitor and SAIC is the logical next step in Scitor's evolution as we continue to support the increasing needs of our intelligence community and Department of Defense customers," said Scitor President Timothy Dills in a statement. "This deal is a rare opportunity to unite two successful companies with shared core values, world-class employees, unbridled entrepreneurial spirit, dedication to customer mission, and complementary talent in the broadest and deepest technical capabilities. I look forward to the opportunities that SAIC will provide in offering increased scale and services to our customers, as well as increased opportunities for our employees."

SAIC said that the acquisition was made to expand into the intelligence and Air Force markets and believes it will be in a better position to do so after the acquisition goes final.

PUBLISHED MARCH 3, 2015