Maryland-based Amentum, a major player in the Department of Energy’s weapons complex, announced this week it will buy another federal contractor, Virginia-based PAE in a cash transaction valued at $1.9-billion.
The acquisition, which includes Amentum’s assumption of some debt, was approved by PAE’s board of directors, according to the release. As a publicly-traded company, PAE shareholders must also approve the deal. The companies want to close the sale by the end of the first quarter 2022, following regulatory approvals, according to a Monday press release .
While lauding the merger agreement in its own press release, Virginia-based PAE said the deal leaves the door ajar for offers from other suitors. There is a “go-shop” period effective through Nov. 29, when PAE “may actively solicit alternative acquisition proposals from third parties in accordance with the terms of the merger agreement,” according to PAE.
But Amentum would pay PAE shareholders $10.05 in cash, which amounts to a 70% “premium” over PAE’s Friday Oct. 22 closing price, PAE said. A quick Internet search showed PAE stock has been floating around the $6 per share level for the past month, before jumping to about $10/share Monday following the announcement of the pending Amentum deal. The PAE stock had been $9.50 per share as recently as July 21 before its price slide of the past three months.
The acquisition would create a multi-faceted federal contractor with more than $9 billion of combined revenue over the last 12 months, the companies said.
“The acquisition of PAE complements Amentum’s growth into intelligence and technology services, deepens its relationship with key agencies such as the Department of State, NASA and the Intelligence Community, and meaningfully adds to Amentum’s scale, depth of client relationships and breadth of capabilities,” Amentum CEO John Vollmer said in the statement.
“This strategic combination of two market leading companies will benefit our customers and create increased opportunities for our employees while maximizing shareholder value,” said Charles Peiffer, Interim President and CEO of PAE.
Founded in 1955 as Pacific Architects and Engineers, PAE employs about 20,000 people doing work in about 60 countries. Industry sources previously said PAE was one of the teams that unsuccessfully bid for the 10-year, $4-billion site services contract eventually won in December 2019 by Leidos-led Hanford Mission Integration Solutions.
Companies typically enter a quiet period after mergers and acquisitions are announced, although the announcement is likely to be touched upon during PAE’s upcoming quarterly conference call on its financial performance set for 8 a.m. Eastern Time on Nov. 4.