Serco announced today it will buy SI international for $423 million.
Acquisition trends: British buyers (QinetiQ, BAE Systems, Serco) continue their buying spree. Mid-sized contractors continue to disappear.
Valuation: Relative to other acquisitions in the government contractor market, Serco appears to be getting a deal (or conversely SI earning a low valuation) paying less than 1x revenue. SI has revenue of $555 million in the last 12 months as of June 2008. SI shareholders are not getting a bad deal, with Serco paying a 40% premium on the August 26th closing price.
SI's cancelled acquisition: SI dropped its acquisition of Arrowpoint in late July. At the time, no reason was given. The announcement today is a good candidate.
British buying spree:
| Buyer: | Seller: | Consideration: | Announced: |
| BAE Systems PLC | Mevatec | $82 million | March 2003 |
| BAE Systems PLC | United Defense Industries | $3.97 billion | March 2005 |
| BAE Systems PLC | National Sensor Systems | $8.7 million | October 2006 |
| BAE Systems PLC | Armor Holdings | $4.1 billion | July 2007 |
| BAE Systems PLC | MTC Technologies | $450 million | December 2007 |
| QinetiQ Group PLC | Apogen Technologies | $300 million | February 2006 |
| QinetiQ Group PLC | Analex | $170 million | January 2007 |
| QinetiQ Group PLC | ITS Corp. | $90 million | March 2007 |
| QinetiQ Group PLC | Boldon James Holdings Ltd | $37 million | October 2007 |
| QinetiQ Group PLC | Dominion Technology Resources | $104.5 million | August 2008 |
| Serco Group PLC | Resource Consultants | $215 million | December 2004 |
| Serco Group PLC | SI International | $423 million | August 2008 |