Defense contractor CACI pulls offer for CSRA

(Reuters) - U.S. defense contractor CACI International Inc CACI.N withdrew its offer to buy peer CSRA Inc CSRA.N on Wednesday, losing a month-long bidding war to General Dynamics Corp GD.N.

The move comes a week after General Dynamics raised its all-cash offer for CSRA to $6.9 billion from $6.8 billion, making it difficult for CACI to match up.

Given that General Dynamics’ offer is in cash, it represents considerably less risk than CACI’s cash-and-stock bid, analysts have said.

CACI’s stock fell 7.5 percent a day after it offered to buy CSRA for $15 per share in cash and 0.184 CACI shares for each CSRA share, lowering its overall offer price and giving an edge to General Dynamics.

“We will continue our aggressive pursuit of strategic opportunities, judiciously and without engaging in auctions at uneconomic levels,” CACI said.

CSRA provides information technology and related services to the U.S. Department of Defense and the intelligence community. General Dynamics is hoping that CSRA will help it grab more of the recently increased U.S. defense budget.

While CACI has been trying to scale up through acquisitions, General Dynamics expects a deal with CSRA to help grab more of the U.S. defense budget.

Information technology and services spending by the Department of Defense is down sharply over the past few years but is expected to pick up as President Donald Trump seeks to bolster military spending.

Reporting by Arunima Banerjee and Sanjana Shivdas in Bengaluru; Editing by Anil D’Silva and Saumyadeb Chakrabarty