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Federal information technology (IT) services provider NCI, Inc. [NCIT] on Monday said it has agreed to be acquired by the private equity firm H.I.G. Capital in a $283 million cash acquisition.
NCI said the acquisition will allow it to speed up its growth plans.
“This partnership with H.I.G. Capital will offer NCI an opportunity to accelerate our growth strategy, enhance our delivery of premier solutions to our customers, including the use of artificial intelligence and agile software development to increase the speed, productivity and capability of their missions, and create new opportunities for our employees,” Paul Dillahay, president and CEO of NCI, said in a statement. Dillahay joined NCI last October from CACI International [CACI] after Brian Clark, NCI’s former president and CEO, abruptly resigned.
The transaction is expected to close in the third quarter of 2017, at which point NCI will become a privately held company. Terms of the agreement call for H.I.G. to pay $20 for each share of NCI’s outstanding Class A and Class B common stock. H.I.G. will begin its tender offer by July 17.
NCI’s board has unanimously approved the deal and Charles Narang, the chairman, agreed to tender all of his shares of common stock in favor of the offer.
In January, NCI announced that it was undertaking an internal investigation after discovering that its former controller had been embezzling money from the company. The investigation, which was completed in March, found that the controller has acted alone and had siphoned $19.4 million from the company between Jan. 2010 and Jan. 2017.
In 2016 NCI posted sales of $322.4 million and net income of $9.5 million. This year the company is expecting sales to be between $324 million and $342 million with adjusted per share earnings between 95 cents and $1.05, versus adjusted earnings of $1.01 in 2016.
On the company first quarter earnings call in May, Dillahay pointed out that the company has a strong win rate on recompeted work but said it has “struggled to grow organically over the past several years.” As part of a strategic turnaround of NCI, he has invested in the company’s business development function and is rewarding the company’s highest performers. At the time he also said the culture at NCI was one that “lacked urgency and focus.”
“I want to emphasize that 2017 is a rebuilding year for NCI,” Dillahay told analysts in May.
NCI’s financial advisers on the deal are Wells Fargo Securities and Stifel, Nicolaus & Company. Teneo Capital is advising H.I.G.
