Contract Merger: PAE to Buy CSC’s Applied Tech Division for $175M

Virginia-based Computer Sciences Corporation has reached a definitive agreement with Pacific Architects and Engineers – PAE for the sale of its base operations, aviation and range services business unit, Applied Technology Division (ATD), for $175 million in cash. CSC acquired ATD with the 2003 purchase of DynCorp.

CSC will sell the aviation maintenance, base operations and maintenance, test and training range and space range businesses of ATD, while retaining the division’s training and simulation business. ATD currently performs work at more than 20 client locations in the continental United States.

“The sale of ATD supports our realignment of company assets with our strategy of leading into the next generation of technology solutions and services, including cybersecurity, big data and cloud computing,” said CSC President and CEO Mike Lawrie.

PAE’s dedicated focus providing mission-critical services to the U.S. government and its allied partners will ease the transition for clients and employees, a CSC release said. ATD’s senior management team and its approximately 5,400 employees will transfer to PAE as part of the agreement.

In fiscal year 2013, ATD revenue was approximately $760 million with low-to-mid single-digit operating margins. ATD revenue has been reported within CSC’s North American Public Sector (NPS) and will be recast as discontinued operations.

The transaction is subject to customary closing conditions, including the receipt of various consents and an anti-trust clearance under the Hart-Scott-Rodino Act. CSC expects to close the transaction in the summer of 2013.

Pacific Architects and Engineers – PAE, a leading provider of global mission services, also announced that it has entered into a definitive stock purchase agreement with CSC, to purchase its Applied Technology Division. The transaction is expected to close this summer.

“The Applied Technology Division has a long and distinguished heritage of providing quality services to the U.S. Department of Defense, NASA and other government customers,” said PAE President Mike Dignam. “This acquisition is in line with our strategy to expand PAE’s strong portfolio by adding companies with proven capabilities and a customer-focused workforce culture. We look forward to working with the Applied Technology Division as we together address the opportunities in today’s dynamic market.”

The Applied Technology Division is comprised of approximately 5,400 employees who provide aviation maintenance, base operations and maintenance, test and training range and space range support of critical U.S. Government installations.

The acquisition of the Applied Technology Division will introduce military and space testing and training services as a new capability in PAE’s portfolio, and will significantly increase the number of PAE clients in the federal services market.

For more than fifty years, PAE has provided training, logistics, and operations and maintenance services to support complex missions for customers around the world. PAE currently employs approximately 10,000 people in more than 60 countries and is headquartered in Arlington, Va.