Cerberus to Buy DynCorp for $1.5 Billion
Cerebrus Capital Management, one of the world’s leading private investment firms, agreed to buy defense contractor DynCorp International Inc., a global government services provider in support of US national security and foreign policy objectives, for about $1 billion. The purchase price would be $17.55 per share – a 49% premium to the April 9/10 close of $11.75, and about 12.4 times the FY 2010 consensus forecast of $1.41 earnings /share.
DynCorp has been plagued with much controversy over the years for its assignments in Iraq, but has nonetheless continued to win contracts from the federal government.
In a statement just the other day, William L. Ballhaus, DynCorp’s chief executive, said: “I believe that under this partnership with Cerberus, DynCorp International will be able to build on our extensive heritage and successful performance to continue to achieve our growth objectives,” “Importantly, this transaction is a major milestone for DynCorp International’s continued leadership in serving our customers and supporting U.S. national security and foreign policy objectives.”
In recent times as credit markets are back to better times, banks have resumed making loans to finance private equity firms, bringing back a fee-laden business. Cerebrus has received financing commitments from Bank of America, Merril Lynch, Deutsche Bank, and Barclay’s among others.
DynCorp’s advisors were Goldman Sachs as well as the law firm Schulte Roth & Zabel, an American law firm and one of the top 100 largest law firms by revenue.
Cerebrus was advised by Evercore Partners, a leading advisory and investment firm as well as the law Akin Gump Strauss Hauer & Feld and Jenner & Block.