What’s the deal’s valuation? That depends on which lens from which you view the deal.
From Unisys’s perspective, the deal is valued at roughly 13x adjusted EBITDA.
But from SAIC’s perspective, the deal is valued at 10.5x CY2020 adjusted EBITDA, adjusted for the net present value of tax assets.
Unisys will use the financial gain to pay down debt, reduce pension obligations, improve the company’s balance sheet, and double down on the company’s core R&D efforts.
SAIC Acquires Unisys’s U.S. Federal Business Unit
Among the key deal anecdotes to note:
Unisys Federal offers infrastructure modernization, cloud migration, managed services, and enterprise IT-as-a-service to U.S. federal civilian agencies and the Department of Defense.
The unit has roughly roughly 1,900 employees and $689 million in revenue.
SAIC says the acquisition will:
Enhance the company’s capabilities in government priority areas, including IT modernization, cloud migration, managed services, and development, security, and operations (DevSecOpps).
Expand SAIC’s portfolio of intellectual property (IP) for government-tailored, commercial-based solutions.
Increases SAIC’s access to current and new customers with a strong pipeline of new business opportunities.
Deliver highly accretive results across all key financial metrics.
In a prepared statement about the deal, Unisys CEO Peter Altabef said:
“This transaction comes at a significant premium to the Unisys trading multiple, and is a tribute to the unique and attractive business that our U.S. Federal colleagues have built over many years. Under the leadership of Venkatapathi “PV” Puvvada, we have become known as a true innovator in the federal market, leveraging powerful intellectual property and a world-class team. This transaction will allow us to significantly enhance our balance sheet, which will create increased operational flexibility that will ultimately position us to better serve our clients while delivering increased value to investors.”
Added Eric Hutto, senior vice president and president, Unisys Enterprise Solutions:
“Our innovative solutions and focus on security have made us a critical partner to many of the largest, most complex enterprises in the world and helped improve the financial performance of Enterprise Solutions in recent periods, We will use the same technology-enabled, intellectual property-based solutions that have helped drive the company’s recent success, such as Unisys Stealth, CloudForte, InteliServe and ClearPath Forward. Our increased capital structure flexibility will allow for further investment in new solutions and more optionality in deal pursuits, with a disciplined focus on optimizing cash flow and profitability.”
Concluded SAIC CEO Nazzic Keene:
“With the addition of Unisys Federal, SAIC will be a leading provider of digital transformation services and solutions to the federal government. This exciting opportunity advances our strategy by building on our modernization capabilities, increasing customer access, accelerating growth and enhancing shareholder value. The financial benefits of acquiring Unisys Federal are compelling, including accretion of adjusted EBITDA margins, non-GAAP earnings per share, and cash generation.”