CSC moves to buy DynCorp

In a move that will expand its work with the federal government, Computer Sciences Corp. is buying DynCorp, an employee-owned information technology and outsourcing company.

The stock-and-cash deal, valued at $950 million, would increase CSC's revenues from the federal government to $6 billion a year, making it one of the 10 largest government contractors, the companies estimated. CSC, of El Segundo, Calif., will assume all of DynCorp's $273 million in debt.

'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 Department and respond to the federal government's initiative to increase its reliance on service providers,' Van B. Honeycutt, CSC chairman and CEO, said in a statement.

The 43-year-old CSC, posting revenues of $11.4 billion for the 12 months ending Sept. 27, said it does business with every agency in the U.S. government. Its major competitors include Electronic Data Systems and IBM Corp.

After closing Thursday at $34.67, shares of CSC opened down at $34.50 on Friday, hours after the acquisition was announced.

Under terms of the deal, which requires shareholder and regulatory approvals, CSC will pay $15 cash and about $43 in market value of CSC stock for each share of privately held DynCorp.

DynCorp of Reston, Va., which had $2.3 billion in revenue for the 12 months ending Sept. 26, will become part of CSC's Federal Sector division, based in Falls Church, Va.

'The combination provides our customers with broader resources and an even higher level of quality services, while enhancing and broadening professional opportunities for our employees,' Paul V. Lombardi, DynCorp's president and chief executive, said in a statement.

The companies expect the deal to close in the first quarter of 2003.


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