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CACI keeping options open
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After a two-year hiatus, CACI International, the Virginia-based provider of IT and network solutions programs to defense and intelligence agencies, is back to making acquisitions and would possibly be open to being acquired itself, according to statements made by JP London, the company's chief executive officer during a recent conference call to analysts.
While maintaining that the company is "not for sale," London said CACI would be "receptive" to any overtures. There has been no public announcement or rumor of any company seeking CACI as an acquisition target.
CACI officials were not available for comment on whether the company's recent absence from making acquisitions represented a wait-and-see attitude to gauge how the US government would proceed with IT-related
programs, or whether CACI would return to aggressively pursuing acquisitions.
Analysts would not comment on a potential price for CACI but the company's recent results and return to acquiring other businesses may warrant a hefty acquisition premium for shareholders in the event of any attempt to acquire CACI.
On May 1, CACI announced that it has finalized its merger agreement to acquire all of the outstanding shares of Virginia-based AlphaInsight Corporation, an information technology company selling software and systems engineering, network engineering and management, and information assurance and security, primarily to the US government.
AlphaInsight increases CACI's business with civilian agencies of the federal government, especially at the Departments of State and Justice, and brings additional work with the Departments of Defense and Homeland Security.
In October 2005, CACI completed the purchase of National Security Research (NSR), a company specializing in homeland security and command and control. Two months ago, the company closed the acquisition of Information Systems Support (ISS), a solutions provider pursuing communications and logistics projects.
CACI's merger and acquisition activity has been a key driver in the company's expansion plans. About half of the company's growth over the most recent five-year period is attributable to acquisitions.
As of mid-day on May 8, CACI was trading on the New York Stock Exchange at US$62.69, edging closer to the company's 52-week high of US$68.75.
Over the same period, CACI shares have rebounded from a low of US$51.45 on the back of strong financial results and award of a portion of a US$19.25 billion contract to support the multiple-award Strategic Services Sourcing (S3) program with the US Army Communications-Electronics Lifecycle Management Command - the largest contract award in CACI's 44-year history.
CACI recently reported announced record results for its third fiscal quarter and nine months ending March 31.
The company posted a strong revenue gain for the third quarter of FY2006. Revenue was US$435.4 million, up US$20.4 million, or 4.9 per cent over FY2005 third quarter turnover of US$414.9 million.
Net income for the third quarter was US$21.4 million, or US$0.69 per diluted share, 5.2 per cent higher than net income of US$20.3 million, or $0.66 per diluted share, for the third quarter of FY2005.
Disclaimer
James Smith is an independent columnist for this web site. James Smith may hold long or short positions in any of the stocks mentioned in this article and those positions can change at any moment.
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www.InvestorIdeas.com/About/Disclaimer.asp, InvestorIdeas is not affiliated or compensated by the companies mentioned in this article. James Smith is a freelance writer. Nothing in the articles should be construed as an offer or solicitation or recommendation to buy or sell any specific products or securities. Past performance does not guarantee future results.
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