Bidding War Over? CACI Withdraws Offer To Buy CSRA

CACI’s $7.2 billion play to purchase Falls Church, Virginia-based IT contractor CSRA ended Wednesday, essentially ending a bidding war among at least three companies that is now likely to end with a General Dynamics/CSRA merger.

In a statement, Arlington-based CACI pulled a bid it submitted March 18 hoping to entice CSRA away from a cash bid it received from General Dynamics. CSRA rebuffed CACI’s bid after General Dynamics upped the ante on its bid to a total value of $9.7 billion, capping an end to a year that also saw a third contractor, SAIC, lob a bid at CSRA.

“CACI continues to believe that CACI and CSRA would be the superior strategic and financial business combination,” CACI Chief Executive Officer Kenneth Asbury said. “The potential for such a high value and transformational transaction certainly warranted our pursuit of this unique opportunity. We will continue our aggressive pursuit of strategic opportunities, judiciously and without engaging in auctions at uneconomic levels.”

CACI’s withdrawal paves the way for General Dynamics to purchase CSRA, though the deal still has at least one hurdle to clear. The Defense Department still has to give approval, given both companies positions in the national security space.

Should the deal clear, General Dynamics’ acquisition of CSRA will create the government’s largest technology services provider by a wide margin. Combined, the companies’ technology services contract obligations from fiscal 2014 through fiscal 2017 exceed $22.7 billion. Leidos, which has $17.2 billion in technology services contract obligations over the same period, is currently the government’s largest provider in that market.