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CSRA shares rocket as government IT firm agrees US$6.68bn takeover by General Dynamics

Last updated: 00:32 13 Feb 2018 AEDT, First published: 19:32 12 Feb 2018 AEDT

Takeover bid
General Dynaics said that it expects to fund the deal with available cash and new debt

CSRA Inc. (NYSE:CSRA) saw its shares shoot nearly 32% higher in pre-market trading after the government IT company agreed to around a US$6.68bn takeover bid from General Dynamics Corp.(NYSE:GD).

Under the terms of the deal, General Dynamics will pay US$40.75 in cash for each CSRA share, which is a 32% premium to Friday's closing price, and including debt, values the firm at US$9.6bn.

Takeover to grow revenue and profits at accelerated rate

General Dynamics said it expects the deal, which is projected to close in the first half of 2018, to add to its earning per share and cash flow in 2019, and generate cost savings of about 2% of the combined company's revenue by 2020.

The group added that it expects to fund the deal with available cash and new debt.

General Dynamics chief executive, Phebe Novakovic said: “We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies. The combination enables GDIT to grow revenue and profits at an accelerated rate."

In pre-market trading CSRA gained 31.9% at US$40.64, while General Dynamics shares were up 2.3% at US$216.88.

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