Privately held Galaxy counts the US Department of Defense, Department of Homeland Security and the Federal Aviation Administration among its clients. With more than 450 employees, it had $90m in revenue for its recent fiscal year ended April 3, of which 76% were DoD and DHS customers.
SRA and Galaxy have worked together on SRA’s Joint Tactical Radio System contract with the federal government for more than a year. SRA chief executive Renny DiPentima said the two companies have very little overlap.
Equity firm Baird said in a research note that, based on SRA’s acquisition criteria, Galaxy likely has been growing more than 20% and generating operating margins of roughly 10%.
Baird expects the deal will be accretive to SRA’s earnings by about 10 cents per share.
Larger than our previous acquisitions, it strengthens each of our three business sectors and greatly enhances our geographic footprint, technical capabilities, and customer portfolio, DiPentima said in a statement.
In particular, DiPentima pointed to Galaxy’s franchise position in tactical command and control, as well as its strong presence at the Army Communications and Electronics Command and FAA.
Fairfax, Virginia-based SRA has been among the most successful IT service contractors in the US. Notably, in late 2003 it won its largest contract, a six-year, $328m contract with the US Agency for International Development. Then in 2004, it won a five-year deal valued at $341m to provider services to the FDIC.
Federal government IT spending is slated at almost 70% of US agencies and is expect to grow 5% overall through 2010.
The Galaxy deal is expected to close by early next month.
