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Computer Sciences, DynCorp to merge

Consulting firm Computer Sciences will acquire DynCorp in a $950 million deal, as part of a move to expand its federal government business.

Consulting firm Computer Sciences will acquire DynCorp in a $950 million deal, as part of a move to expand government business, the companies said Friday.

Under the deal, expected to close in the first quarter, each DynCorp share will be exchanged for $15 in cash and $43 worth of Computer Sciences shares. Computer Sciences will also assume $273 million of DynCorp's debt.

Privately held DynCorp, based in Reston, Va., recorded revenue of $2.3 billion over the 12 months that ended Sept. 26 and has 23,000 employees worldwide. The company provides consulting services such as network integration and global defense logistics. According to the company's Web site, DynCorp's clients include more than 40 federal agencies, including the departments of defense, state, agriculture, energy and justice.

"With this transaction, we are seizing an opportunity to significantly strengthen our leadership position in the U.S. federal marketplace, augment our capabilities to support the requirements of the new Homeland Security Defense Department and respond to the federal government's initiative to increase its reliance on service providers," Computer Sciences CEO Van Honeycutt said in a statement.

El Segundo, Calif.-based Computer Sciences said it expects the deal to begin adding to the bottom line in fiscal 2004, except for a special transaction-related charge. When the deal is complete, Computer Sciences expects to get $6 billion in revenue annually from its government business, which will have roughly 38,000 employees. Computer Sciences reported revenue of $11.4 billion for fiscal 2002, with about $2.9 billion of that derived from its government business.