Throughout the first half of federal fiscal year 2021, several government contractors have engaged in M&A actions to expand their corporate capabilities and deepen their customer knowledge. Select highlights out of the acquisition newsreel are highlighted below.
Peraton
Peraton had a rapid succession of large-scale acquisitions over just the last four months in the form of Perspecta and Northrop Grumman’s IT services business.
Perspecta
In January 2021, it was announced that Veritas Capital, the private equity firm that owns Peraton, would acquire Perspecta for $7.1 billion. Once the deal is closed, Perspecta will be combined with Peraton and will operate under the Peraton name.
Through this acquisition, Peraton will likely gain more past performance to leverage in the Navy, intelligence community, and Centers for Medicare and Medicaid Services. Learn more about this acquisition and what the new Peraton will look like in our previous blog.
Northrop Grumman’s IT business
In December 2020, Veritas Capital announced the $3.4 billion acquisition of Northrop Grumman’s IT and mission services business and its intended merger with Peraton.
Peraton already announced the restructuring of the business to accommodate this acquisition through the creation of four sectors—Space and Intelligence, Cyber Mission, Global Defense and Security, and Civil and Health.
The acquisition will provide Peraton with a strong base of IT work at the CDC. The Northrop Grumman IT-led Civil and Health sector at the new Peraton will likely be aggressive in expanding their CMS and civilian health work.
Peraton additionally announced the integration of Romotec, a mobile robotic system that was part of Northrop Grumman’s IT business, as a subsidiary. The system, designed for hazardous operations, will complement Peraton’s existing unmanned systems business.
Leidos
Leidos has made some interesting acquisitions in the last year beyond their large-scale acquisition of Dynetics in 2020. This includes the 1901 Group and Gibbs & Cox.
1901 Group
In January 2021, Leidos completed the acquisition of 1901 Group for approximately $215 million. 1901 Group provides cybersecurity, digital modernization, managed IT services and cloud solutions for commercial and federal customers. It will operate as a wholly owned subsidiary of Leidos and add 400 IT, cloud, and cyber specialists to the Leidos team.
The acquisition answers Leidos’ call for more robust capabilities in cloud and managed IT services, which Leidos recognizes as in-demand and the path for the future.
1901 Group also brings some noteworthy corporate capabilities, including their Enterprise IT Operations Center (EITOC). Based in Blacksburg, VA, the EITOC is 1901 Group’s FedRAMP authorized facility that provides 24×7 managed services for cloud migration and operations that include IT service management, IT operations management, cyber security, data intelligence, and automation services.
Gibbs & Cox
In February 2021, Leidos announced its acquisition of Gibbs & Cox for $380 million as part of their efforts to expand into the maritime market, where Leidos has stated it lacks a substantial footprint. The acquisition additionally enables Leidos to grow in the autonomous maritime market and adds valuable engineering talent, including naval architects and digital engineers, to the Leidos team.
Consisting of 525 employees, Gibbs & Cox’s portfolio is focused on naval architecture and marine engineering services including electrical engineering and design integration, environmental, safety and health, program management, structural engineering and production design.
Serco and Whitney, Bradley & Brown
In February 2021, Serco North America (Serco) announced its acquisition of Whitney, Bradley & Brown (WBB) for approximately $295 million. WBB is a consulting services company that employs over 1,000 personnel and 200 subject matter experts. It now operates as a business unit within Serco. WBB was acquired by H.I.G. Capital as recently as November 2017 who in turn helped WBB acquire Decision Analytics in January 2020.
The acquisition is intended to expand Serco’s scope of services with the Air Force, Army, Missile Defense Agency, Office of the Secretary of Defense, and other key accounts. It also aims to increase their acquisition and program management capabilities in the DoD, bolster Serco’s existing capabilities in AIML, data analytics, and cyber consulting, and provide new expertise in wargaming, modeling, and simulation.
Tyto Athene and AT&T Government Solutions business
In March 2021, Tyto Athene announced its acquisition of AT&T Government Solutions, Inc. (GSI) for an undisclosed amount, which comprises AT&T’s Department of Defense IT professional services businesses. AT&T and Tyto Athene also entered into a teaming agreement for opportunities in the DoD IT professional services market.
This acquisition is intended to enhance Tyto Athene’s technology-enabled digital transformation and joint all-domain operations with the U.S. Air Force and other DoD customers.
What does this mean?
- With its latest acquisitions, Peraton will become one of the largest professional services contractors in U.S. government contracting. This will enable Peraton to scale and compete for large-scale IT efforts against top competitors in this space.
- Peraton’s launch of a mobile robotic systems subsidiary could indicate they are developing more DoD weapon systems, platforms, and new technologies to position themselves as a modern DoD technology provider.
- Leidos is on a streak of buying smaller, niche companies to build their capabilities in targeted service areas and markets. While the acquisition of 1901 Group fulfills their objective to enhance qualifications in cloud and managed IT services, Gibbs & Cox allows them to further penetrate the maritime market.
- Tyto Athene’s and Serco’s acquisitions are more customer-focused, with the goal to expand their footprints in the DoD market. Serco’s acquisition of WBB compliments the modeling and simulation capabilities they gained from their previous acquisition of Alion Science & Technology’s naval systems business unit. This could indicate they are further building capabilities in acquisition and system engineering and integration.
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