DynCorp International to be acquired for $1.5B
Falls Church security contractor DynCorp International Inc. has agreed to be acquired by private investment firm Cerberus Capital Management LP for $1.5 billion.
Terms of the proposed transaction call for Cerberus to pay $17.55 in cash for each share of DynCorp International common stock, approximately $988 million in cash based on the approximately 56.29 million shares of stock outstanding. Assumption of debt would make up the balance of the purchase price.
The cash price of $17.55 for DynCorp shares (NYSE: DCP) is a 49 premium to its closing price Friday of $11.75 per share. DynCorp went public in May 2006 at $15 a share. The stock reached its peak in Jan. 2008 when it traded at $27.58.
As a security contractor, DynCorp has been active player in U.S. security missions around the globe, especially Iraq. In its latest profit report, DynCorp earned $20.3 million, or 36 cents per share, on revenue of $915 billion.
The acquisition by Cerberus has been approved by DynCorp’s board of directors and recommended to shareholders, but is contingent on approved by a DynCorp shareholder vote.
DynCorp has the opportunity to get more from a sale. The acquisition agreement gives DynCorp 28 days to solicit alternative proposals from third parties and the company said Monday it intended to consider any such proposals. But at least one big block of owners think the Cerberus offer is good enough to take. Affiliates of Veritas Capital FundManagement LLC, which hold nearly 35 percent of DynCorp International shares, have agreed to vote in favor of the transaction.
Assuming the deal is approved by shareholders and government regulators, both firms expect the transaction to close in the third or fourth quarter of 2010. After that, DynCorp would become a private company wholly-owned by Cerberus.