UK companies snap up government IT provider and engineering and logistics firm
The UK's BAE Systems and Qinetiq have moved to strengthen their North American presence by acquiring US technology firms. BAE will acquire government information technology provider Digital Net for $595 million, while Qinetiq is to pay $130 million for engineering and logistics specialist Westar Aerospace & Defence Group.
In acquiring Herndon, Virginia-based DigitalNet, BAE Systems North America is following other US defence contractors in expanding into government IT integration. DigitalNet is expected to have revenues of $376 million this year, up 16% from 2003. Managed network services account for more than 60% of its revenues, which are split between civilian agencies, the US Department of Defense and intelligence agencies.
BAE says the acquisition will give it annual revenues of more than $1.2 billion in a US government IT services market worth $12 billion a year and growing at more than 8% a year. BAE's North American arm already accounts for more than 20% of the company's sales and profits, with 10% organic sales growth a year.
With annual sales of $140 million, St Louis, Missouri-based Westar will become an autonomous subsidiary of Qinetiq North America, with the existing management reporting to an independent board of directors. In addition to modelling and simulation, systems engineering, programme management, IT and logistics businesses, Westar has subsidiaries producing engine-inlet filters and flat-panel displays.
GRAHAM WARWICK / WASHINGTON DC
Source: Flight International
