British Firm To Acquire U.S. Defense Services Company

Defense Daily, Dec 17, 2004

Britain's Serco Group yesterday said it has agreed to acquire Resource Consultants Inc. Holdings Corp., a Virginia-based firm that provides professional services to DoD and other parts of the federal government, in a $215 million cash deal that would nearly triple Serco's North American business.

Serco said the deal better positions it to compete in the United States, which is the world's fastest growing service contracting market.

"North America is one of our chosen markets," Christopher Hyman, Serco's chief executive, said in a statement. "Opportunities in the federal market are substantial for companies with proven capabilities and qualifications. This acquisition will give us deeper and broader access and will enable faster and more profitable growth."

Serco, which had about $3 billion in sales last year, did $127 million in business in North America in 2003. RCI had $240 million in sales last year and is projecting double-digit increases this year, Serco said. RCI's profit last year was $9.1 million.

The acquisition, expected to close within 90 days, would also give Serco's North American business new capabilities and new customers. In the United States, the company's biggest contract is managing certain air traffic control towers for the Federal Aviation Administration, which accounts for $25 million in annual sales, while its next two largest contracts are for vehicle maintenance with the Air Force and Forest Service, both worth about $5 million annually. Serco also serves state and local customers. Serco said that about 75 percent of RCI's work is with DoD. RCI's work involves information technology services, systems engineering, supply chain management, human resources business process management and strategic consulting. RCI's other customers include the Postal Service, federal civilian agencies and state and local governments.

RCI sees the acquisition opening global markets for its services while giving it more resources. "This transaction positions RCI to continue our record of growth and will give us the resources and capabilities to achieve our broader strategic vision, to expand our U.S. business and enter the global services market," RCI President George Troendle said in a statement. Serco is acquiring RCI from CM Equity Partners, the majority owner, and other shareholders. Legg Mason Wood Walker served as the financial adviser to RCI and CM Equity Partners.

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