Nortel Buying PEC Solutions

Nortel (NT) agreed Tuesday to buy federal contractor PEC Solutions (PECS) for $448 million in cash.

Nortel said the deal would be earnings-neutral in the first year and accretive afterward.

Nortel will pay $15.50 a share for PEC, which closed Monday at $11.31.

"Nortel is playing to win, and the acquisition of PEC is another example of Nortel's unwavering commitment to strategic business initiatives in the government, services and security arenas," said CEO Bill Owens. "This acquisition will aggressively position Nortel in the U.S. federal government IT market. This market is characterized by consistent and steady growth and presents a significant opportunity for Nortel, based on expected demand for our specific technology and services capabilities in this market."

PEC, founded in 1985 and based in Fairfax, Va., works with homeland security, law enforcement, intelligence, defense and civilian agencies across the government to solve technology challenges.

The deal comes as Nortel continues to struggle to puts its books in order and file the appropriate documents with regulators on time. The company has been involved in a multiyear restatement process ever since some profits were discovered two years ago to have been inflated.

Nortel closed Monday at $2.76.

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