AMS to acquire defense and Intel services firm, Vredenburg acquisition intensifies AMS commitment to national security, brings new customers - American Management Systems

EDP Weekly's IT Monitor, July 28, 2003

American Management Systems (NASDAQ:AMSY) , a global business and IT consulting firm, recently announced that it has signed a definitive agreement to purchase the equity of privately owned R.M. Vredenburg & Co., a leading provider of professional and technical services to the Department of Defense (DoD) and U.S. Intelligence communities, for approximately $42 million in cash. The agreement also includes the assumption of approximately $2.7 million in debt, up to $4 million in performance-based earnout payments, and management retention agreements of up to $4.3 million. The purchase price will be finalized as of the closing date and is subject to potential adjustment.

Once completed, the acquisition will add approximately $60 million in annual revenues to AMS, provide access to additional government contract vehicles, and will expand AMS's presence and capabilities in the DoD and U.S. Intelligence markets.

"This acquisition is consistent with our strategy of achieving growth and scale within our primary markets through both organic and inorganic means," said AMS Chairman and CEO Alfred T. Mockett. "In Vredenburg, we have chosen an organization that will build on our legacy of commitment to the national security community and is an exceptional cultural fit with our existing public sector practice." Mockett noted that the acquisition would be earnings accretive during the current year.

Founded in 1968, Reston, Virginia-based Vredenburg provides professional and technical services to customers within the U.S. Navy, and U.S. Intelligence agencies, as well as federal civilian agencies, state and local governments and certain commercial businesses. Approximately 90 percent of Vredenburg's 300 professional staff hold government security clearances at the secret level or higher and approximately 30 percent hold a top-secret clearance. For the twelve months through to June 2003, Vredenburg had revenues of approximately $58 million.

"Vredenburg will bring key long-term customer relationships, and a solid reputation for high quality work to our established portfolio of defense and intelligence business," said John Hillen, AMS senior vice president leading the company's defense and intelligence practice. "Our new team members are especially talented and accomplished. The combination of our two businesses will provide new levels of opportunity for AMS as well as enhanced capability to our customers as they transform their organizations in accordance with the new national security strategy and defense posture."

The acquisition will add critical infrastructure protection capabilities, sophisticated document management technologies, and new program management expertise to AMS's industry-leading offerings in financial management, acquisition and procurement, business intelligence, enterprise architecture, and technology consulting.

"The combination of business lines and core competencies will greatly enhance the depth and breadth of services we can offer clients," said Vredenburg President and Chief Executive Officer Chick Baboyian. "We are excited about joining forces with a firm that has earned such a strong reputation in the public sector and shares our commitment to customers and employees."

The transaction is subject to customary closing conditions and legal requirements and is expected to close within the next 30 days.