Seeking more products work, CACI tees up two acquisitions

January 31, 2019

By Marjorie Censer

CACI International said this week it has agreed to acquire LGS Innovations as well as Mastodon Design for a total of $975 million.

LGS Innovations focuses on real-time spectrum management, C4ISR and cyber products and solutions for the Pentagon and intelligence agencies, while Mastodon has expertise in rugged signals intelligence, electronic warfare and cyber operations, CACI said.

The two additions are expected to add about $480 million to sales over the next 12 months. Ken Asbury, CACI's chief executive, said during a call with analysts that CACI is paying $750 million for LGS and $225 million for Mastodon.

The acquisitions mark the latest move by CACI to make a significant deal. The company last year sought to purchase CSRA, but was beat out by General Dynamics.

Asbury told analysts the deals will boost CACI's work in solutions and products. He said the company sought to increasingly move into this type of work, rather than just professional services, about six years ago, seeking "a more enduring place to be in the marketplace."

He said the strategy began with the company's 2013 acquisition of Six3 Systems.

Asbury described solutions and products as work in which CACI "would expect to get a higher return because we're using either intellectual property or the unique skill sets of our people."

LGS, headquartered in Herndon, VA, has 1,320 employees, while the Rochester, NY-based Mastodon has about 50. The Mastodon deal has already closed, while the LGS transaction is slated to close in March.

Meanwhile, CACI said yesterday sales in its most recent quarter reached nearly $1.2 billion, up about 9 percent from the same three-month period a year earlier.

The contractor's quarterly profit hit $69 million, down 52 percent from the prior year. The company said its prior year quarterly profit was boosted by the tax legislation passed in late 2017.