Amentum to acquire PAE

Amentum plans to bolster its intelligence and technology portfolio by acquiring fellow US government services provider PAE for USD1.9 billion in cash, the two companies announced on 25 October.

The combined business will have more than USD9 billion in annual revenue, making it one of the largest providers of services to US and allied governments, Amentum said. It will have “capabilities spanning synthetic training, sensor-based technologies, intelligence, cyber and IT, spectrum and electronic warfare, space operations, environmental solutions, asset management, and mission support”, Amentum said.

While the acquisition agreement allows PAE to solicit alternative offers through 29 November, PAE's board of directors unanimously endorsed Amentum's proposal, which calls for PAE shareholders to receive a 70% premium on their company's 22 October closing stock price.

The proposed combination “will benefit our customers and create increased opportunities for our employees while maximising shareholder value”, said Charles Peiffer, PAE's interim CEO.

Amentum said it expects to complete the deal by the end of the first quarter of 2022 after receiving the approval of regulators and PAE shareholders.

Both companies have previously been active on the acquisition front. Amentum boosted its annual revenue to more than USD6 billion by acquiring DynCorp International for an undisclosed sum in November 2020. PAE bought intelligence analysis providers CENTRA Technology and Metis Solutions for USD208 million and USD92 million, respectively, last year.

Amentum and PAE are both based in the Washington, DC, area. Amentum has more than 34,000 employees, and is owned by US private equity firms American Securities and Lindsay Goldberg. PAE has about 20,000 employees and became a public company in early 2020.