Federal Data comes into Northrop fold
- By Dan Caterinicchia, Dan Caterinicchia
- Sep 11, 2000
In a move to bolster its place in the government information technology
market, Northrop Grumman Corp. announced Sept. 6 that it had signed an agreement
to acquire Federal Data Corp. (FDC), a systems integrator and software solutions
FDC — whose federal customers include the National Institutes of Health,
NASA, the Federal Aviation Administration and others — will be folded into
the operations of Logicon Inc., a Northrop Grumman company, said Herb Anderson,
president and chief executive officer of Herndon, Va.-based Logicon.
"One of the major reasons we looked at [FDC] is that we do a lot of the
same things but not with the same agencies," Anderson said, adding that
the acquisition gives both companies growth potential in areas where they
previously have enjoyed only limited success.
The deal enables Logicon to offer an arsenal of high-end IT services
and support and gives FDC easier access to the Defense Department and other
government niches, Anderson said. Logicon's areas of expertise include command,
control, communications and intelligence; weapons systems; and training
"This fit just like a glove for us in our strategy for growth," he said.
Phil Finnegan, senior analyst at Fairfax, Va.-based Teal Group Corp.,
a defense and aerospace research and consulting firm, said the acquisition
is a good fit for Northrop Grumman for several reasons.
"Northrop Grumman had a problem because they have done a good job of
replacing revenues from the B-2 stealth bomber program, but they need to
do more," Finnegan said. "IT has been a good area for them. They've made
four acquisitions in IT since 1997, but this acquisition is important because
it takes them further into commercial IT, which has higher growth than defense
The transaction is valued at $302 million and is expected to be complete
within 45 days, pending governmental approval. At that point, Anderson and
Dan Young, president and CEO of Bethesda, Md.-based FDC, will head a transition
team composed of representatives from both companies to discuss myriad issues,
including the FDC brand name, the location of corporate offices and personnel,
and potential layoffs and job changes.
Young said FDC employees found out about the acquisition on Sept. 6 with
the rest of the world, and although he anticipates "a lot of vultures hanging
around" to try and lure away employees, he said he does not expect a backlash
The Carlyle Group, the private investment firm that bought FDC in 1995,
had been in discussions with Northrop Grumman since January about a possible
acquisition, Young said.
This is not the first time the two companies have done business together,
Finnegan said. The acquisition comes on the heels of a deal in July in which
Northrop Grumman sold its commercial aerostructure group to the Carlyle
Group for $1.2 billion, and they have also worked together on acquisitions
in the past, he said.