ManTech to Acquire Integration Firm in Homeland Security, Defense Markets

Gray Hawk Systems specializes in IT and systems engineering


ManTech International [MANT] last week said it has agreed to acquire Gray Hawk Systems, Inc., a provider of information technology and systems engineering capabilities to the homeland security and defense markets, for $100 million in cash.

Gray Hawk, which has core competencies in critical infrastructure protection, counter-intelligence and counter-terrorism mission support, information processing and warfare systems engineering, had $70 million in sales last year and expects about $90 million this year.

The company has 500 employees, 90 percent of whom have clearances, with 70 percent at higher level clearances.

"The Gray Hawk Systems acquisition solidifies our position as a leading player in the high-end intelligence market," Robert Coleman, ManTech's president and chief operating officer, said in a statement. "It greatly expands our presence in homeland security related missions and meshes very well with our high-end offerings in the intelligence community and Department of Defense." He also said the purchase will give ManTech access to new markets in national defense agencies that will grow in importance as the 2004 intelligence reform legislation takes hold.

Analysts generally liked the proposed deal as a good strategic fit for ManTech.

Gray Hawk's customers include the Departments of Homeland Security, State, Justice, DoD, the intelligence community and other federal agencies. About 75 percent of its customers are homeland security related and the remainder in the DoD and intelligence areas.

ManTech expects the deal to be immediately accretive to earnings and said it would gain a benefit of at least $25 million through a tax deduction it will get through the purchase.

Separately, ManTech reported gains in its first quarter earning and sales. Net income increased 5 percent to $11.9 million, 36 cents earnings per share (EPS), on a 15 percent increase in sales to $217.5 million, compared to net income of $11.3 million (35 cents EPS) on $189.6 million in sales. Organic growth was 14 percent.

For the year, the company expects sales between $980 million and $1 billion.