The Deal: GTCR Sheds Six3 Systems

NEW YORK ( TheStreet) --Government services firm CACI International ( CACI) said Wednesday it would acquire privately-held Six3 Systems in a $820 million deal that would expand the company's reach inside the coveted defense and national security sectors.

McLean, Va.-based Six3 provides highly-specialized services and products to the Department of Defense and U.S. national security agencies, areas CACI sees upwards of $15 billion in future market opportunities. The company is currently owned by private equity firm GTCR.

Six3 employs about 1,600 worldwide and is expected to generate 2013 sales of $470 million. CACI, of nearby Arlington, Va., said the deal is valued at about 11.5 times Six3's forward Ebitda projections.

CACI chairman J.P. (Jack) London in a statement said the Six3 "fits perfectly within the objectives of our strategic growth plan," positioning the buyer "with expanded capabilities to deliver high-value and in-demand solutions and services for our customers' highest-priority national security and defense challenges."

The buyer said it expects the deal to be at least 5% accretive to GAAP earnings in 2014. CACI said it will finance the deal through borrowings under its existing revolving credit facility, and a new secured financing commitment of $800 million. Chicago-based GTCR formed Six3 in 2009 with defense industry veteran Bob Coleman and used a series of acquisitions to build the company. Lawrence Fey, a principal with the firm, praised Coleman's effort to "build a highly strategic asset with an impressive track record of growth."

Government services firms have been scrambling to shore up their businesses amid political budget battles and sequestration talk. Defense bankers have said for months that there is a pent-up need for dealmaking given the number of companies chasing a shrinking revenue pot, but disagreements on valuation among would-be buyers and sellers has stymied dealflow.

A defense source reached Wednesday called Six3 "a rare high-quality asset on the block," saying the transaction was more of a one-off than a harbinger of things to come. "We have a firm holding a high-quality asset who decided it was time to sell," the source said. "End of story."

CACI, which has done more than 50 acquisitions since its founding in 1962, has been following Six3 "with great interest for some time," according to CEO Ken Asbury. This would be CACI's largest deal in its history.

Bank of America Merrill Lynch acted as financial adviser to CACI, with Squire Sanders (US) and Latham & Watkins serving as CACI's legal counsel and Chertoff Group and CSP Associates listed as strategic advisers.

Six3 was advised by Goldman Sachs, JPMorgan Securities and Kirkland & Ellis.

-- Written by Lou Whiteman in New York

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