Shifting allegiances

Contractors gobble up smaller Va.-based peers

Published March 1, 2019 by Jessica Sabbath

Several of the commonwealth’s largest government contractors acquired smaller Virginia-based companies last year.

Virginia’s largest defense contractor, Falls Church-based General Dynamics, won a bidding war with Arlington County-based CACI to buy information-services company CSRA. The CSRA deal was valued at $9.7 billion.

CSRA joins the General Dynamics Information Technology business unit.  CSRA was formed in late 2015 when IT company CSC, now known as DXC Technology, spun off its North American public-sector unit and merged it with SRA International.

DXC Technology was involved in another big shakeup last year. The company spun off another business in June, which was then combined with Chantilly-based Vencore Inc. and Colorado-based KeyPoint Government Solutions. Both Vencore and KeyPoint were owned by affiliates of Veritas Capital, a private equity group.

Now called Perspecta, the newly formed company has 14,000 employees and annual revenues of more than $4 billion. It is traded on the New York Stock Exchange.

Also in June, Falls Church-based defense contractor Northrop Grumman Corp. completed its acquisition of Dulles-based Orbital ATK for $9.2 billion. Orbital ATK, an aerospace and defense technology company, is now Northrop Grumman Innovation Systems. It represents Northrop Grumman’s fourth business sector.

Earlier this year, SAIC completed its $2.5 billion acquisition of Chantilly-based Engility Holdings, an engineering and logistics services company. 

Contractors weren’t the only ones making big acquisitions. Dominion Energy made its largest acquisition ever earlier this year when it bought SCANA Corp., a troubled South Carolina-based utility holding company. The deal, which included the assumption of $6.6 billion in SCANA debt, was valued at more than $14 billion. SCANA had been dealing with the aftermath of a failed nuclear reactor construction project that pushed customers’ utility bills higher.

Other publicly traded companies in Virginia dominated headlines — not because of their billion-dollar deals, but because they planned to move their headquarters to other states. After lengthy speculation in the media, Norfolk-based Norfolk Southern decided to move to Atlanta. In addition, Advance Auto Parts, which will continue to house operations in Roanoke, will move its headquarters from the Star City to Raleigh, N.C.

Virginia also landed a major new player on its list of private companies. Bechtel Corp. moved its headquarters from San Francisco to Reston last year, consolidating corporate leaders that were dispersed among three offices. The global construction firm had $25.9 billion in revenues in 2017, according to the Washington Business Journal. The company has run most of its operations from its Reston office for the last decade.

Candy maker and pet food company Mars Inc. continues to dominate the private companies list with more than $35 billion in revenue.

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Largest companies charts:

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• Defense contracts
• Mergers & acquisitions