Former Edward Snowden Employer Booz Allen Expands Govt. Business With eGov Buy

Booz Allen Hamilton Holdings Corp. (BAH), the government services firm that became a household name as the employer of Edward Snowden, has not shied away from defense IT in the years since. In fact the company moved to expand its business Tuesday with a $250 million deal to acquire web architect firm eGov Holdings Inc.

eGov, which does business as Aquilent, is a Laurel, Md.-based developer of .gov sites for various Federal agencies. The company employs about 350, providing digital and cloud-based services for agencies including the U.S. Postal Service, the Department of Health and Human Services and the General Services Administration.

Aquilent was formed in 2002 as a spin out from one-time dot-com darling Commerce One Inc., which went bankrupt in 2004.

Booz Allen is a McLean, Va.-based firm that provides IT and other services for government and private clients. The company said the purchase would expand its cloud and mobile tech expertise.

"We are driving sustainable quality growth through client solutions that blend technical capabilities and talent with our consulting heritage," CEO Horacio Rozanski said in a statement. "This exciting addition to Booz Allen will bolster our capacity to provide digital transformation to clients."

Booz Allen in recent months has announced a number of digital services contracts, including a $25 million award to support the GSA and a seven-year contract awarded by the Post Office Enterprise Mobile Computing division. The company in the years since Snowden has maintained a number of high-profile contracts with agencies including the National Security Agency, and earlier this year had a second employee arrested after the FBI allegedly found highly-classified information at his Maryland home.

By comparison, the work Aquilent does would appear to be pretty benign. But the company has been growing at a compound annual rate of about 28% over the past five years. Cowen & Co. analyst Cai von Rumohr in a note said that adding Aquilent would give Booz Allen a unit with above-average growth, and which could enhance the company's probability of winning future bids.

"It's a nice synergistic fit that should enhance Booz Allen's organic growth potential at an attractive price of under 10x trailing Ebitda if adjusted for net tax benefits," von Rumohr wrote.

Post-deal Booz Allen's digital operation will keep Aquilent's Laurel-based facility. Aquilent CEO David Fout in a statement said the deal "offers the chance to expand into new areas of digital work, expands capabilities for our clients through the breadth of their relationships, and is a great opportunity for the people of Aquilent."

Houlihan Lokey served as the financial adviser to Aquilent.

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