Booz Allen Hamilton [BAH] on Tuesday said it has agreed to acquire federal information technology (IT) provider Liberty IT Solutions for $725 million in cash in a deal aimed at strengthening its capabilities in end-to-end digital solutions, expanding work in the federal health space, and growing its talent base.
The transaction is subject to regulatory approval and is expected to close during the second quarter of 2021. The acquisition price excludes a $73 million to $83 million tax asset.
Liberty IT, which is based in Northern Virginia, is expected to contributed between $300 million and $340 million in annualized sales and between $46 million and $50 million in adjusted operating earnings in Booz Allen’s fiscal year 2022, which began on April 1. Liberty IT has a backlog exceeding $2 billion in digital transformation work.
Liberty IT’s strengths are in cloud computing, low code/no code, DevSecOps, application programming interface development, solutions architecting and integration, and data management and analytics.
“This acquisition supports our long-term strategy to drive continued growth by investing in innovative technologies and talent at scale,” Horacio Rozanski, president and CEO of Booz Allen, said in a statement. “The addition of Liberty strengthens our unique market position as a leader in digital transformation, accelerates already robust growth in our health business and beyond, and delivers value for our people, our clients, and our shareholders.”
Liberty IT also has an Agile Center of Excellence in Melbourne, Fla., and a presence in Exton, Pa. Booz Allen said the Agile Center has capabilities in rapid prototyping, continuous integration, deep functional expertise, and scrum team collaboration, and is a Salesforce talent development hub for training a certified technical workforce.
Liberty IT has about 600 employees, including architects, engineers and technical personnel. Booz Allen said that Liberty IT’s key leadership will remain with the company.
Liberty IT’s financial advisor on the deal is Baird and Jefferies is advising Booz Allen.
Booz Allen has $7.5 billion in sales in its fiscal year 2020 and is projecting between 5 and 6 percent growth for FY ’21, which will be reported on May 21.
Booz Allen expects Liberty IT to add between 20 and 24 cents to adjusted EPS in FY ’22.