Big Deal: General Dynamics Buys CSRA

Defense contractor General Dynamics dramatically improved its business footprint across the federal government Monday, announcing a $9.6 billion acquisition of CSRA.

General Dynamics’ acquisition of one of its largest rivals elevates the company’s annual revenue to $9.9 billion, just shy of Leidos, which became the $10 billion top dog in federal IT two years ago after buying Lockheed Martin’s IT business..

Under the deal, General Dynamics will spend $6.8 billion, assuming $2.8 billion in CSRA debt.

"The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT," said Phebe Novakovic, chairman and chief executive officer of General Dynamics, in a statement. "CSRA's management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins. We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies."

CSRA’s purchase comes after the company had a big year, capturing $5 billion in revenue and landing several notable contracts. Perhaps most importantly, the National Security Agency awarded CSRA $2.4 billion to develop one of the portions of its classified Groundbreaker program. CSRA also captured the Defense Department's milCloud 2.0 contract, valued at half a billion dollars.

 Larry Prior, CEO of CSRA, said General Dynamics new portfolio “creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities.”

“Our combination with General Dynamics represents an excellent outcome for CSRA's stockholders, employees and customers. It builds on strong shared values, culture and a passion for serving our customers' missions,” Prior said in a statement.

A spokesperson for General Dynamics said the companies will continue to operate as separate entities until the acquisition has gone through regulatory reviews, which could take several months.