BAE Expands In US
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Network security specialist DigitalNet Holdings is to be acquired by BAE of the UK. The company's biggest customer is the Pentagon for whom it builds secure networks. The deal at $600 is BAE's largest in the US in four years. BAE has in recent years seen the US as the prime growth engine for its business. New Chairman Dick Olver publicly supported the strategy last week. Indeed the DigitalNet deal is the fourth in the US this year. Traditionally BAE has been centred on building platforms such as ships and aircraft on which it can its weapons systems. Expansion in the US however has centred on electronic warfare. DigitalNet however gives a foothold in the market for civilian security. The Pentagon and Intelligence agencies are the biggest customers of DigitalNet. National and regional law enforcement groups such as the Justice Department and Department of Homeland Security. The push by the American military for more sophisticated technologies has driven the price of such assets to record levels. This makes the cost of expansion high. The cost is $500m in cash and BAE will take on $93m of debt. The price equates to $30.25, a 31% premium on Fridays closing price.
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