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Case Studies

Peter A. Sokoloff & Co. regularly analyzes transactions which occur within the industries covered. An archive of these case studies is kept online as a courtesy to our colleagues. To receive by e-mail new case studies as they are prepared, please e-mail [email protected] with your contact information.

Archives > Transaction Case Study #6

General Dynamics to Acquire Anteon

Dear Colleague,

Today's case study looks at General Dynamics (NYSE:GD) announcement that they have entered into a definitive agreement on December 14, 2005 to acquire Anteon International Corporation (NYSE:ANT). Paying $55.50 cash for each outstanding transaction yields a total purchase price of approximately $2.2 billion, including the assumption of Anteon’s $100 million of net debt. The transaction is expected to close in the second quarter of 2006.

General Dynamics agreed to pay a 36 percent premium over Anteon’s closing share price on the day before the announcement (December 13th closing price was 40.77 per share). The purchase price is about 15.3 times EBITDA and 1.52 times Anteon’s trailing twelve months sales.

General Dynamics employs approximately 71,900 people worldwide and had 2004 revenue of $19.2 billion. The company is involved in mission-critical information systems and technologies; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and business aviation.

Anteon has approximately 9,500 employees worldwide, $1.45 billion in trailing twelve months revenues, with 2006 revenues projected at $1.72 billion. The company designs and integrates technology systems for national defense, intelligence and emergency departments.

This is a strategic acquisition for General Dynamics and it will experience some dilution as a result of the transaction. Validating market acceptance of this, GD stock went up after the announcement.

General Dynamics began building up the area of security and intelligence via its 2003 acquisition of Veridian. Anteon brings a workforce that is 35 percent scientists or network, systems or software engineers; more than 65 percent have secret or top-secret security clearances.

“This superb company significantly strengthens the ability of our Information Systems and Technology group to provide a broad menu of seamless information technology (IT) services to Defense, Intelligence and Homeland Security customers which will enable General Dynamics to reach a higher level of performance and create additional shareholder value,” said Nicholas D. Chabraja, General Dynamics chairman and CEO.

We hope that you find this feature from Sokoloff & Co. interesting, informative and useful.  We welcome your comments and suggestions.

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