(Reuters) - Science Applications International Corp, a provider of information technology and engineering services to governments, said on Sunday it will acquire Scitor Corp, a smaller peer, for $790 million in cash.
The deal is aimed at helping SAIC, which has a market capitalization of $2.5 billion, expand its offerings to the intelligence community and Air Force markets following its spinoff of Leidos Holding Inc in 2013.
Scitor is owned by private equity firm Leonard Green & Partners LP. The deal, which was first reported by Reuters earlier on Sunday, is expected to close in May.
Cuts in U.S. government spending, particularly in the areas of defense and security, have hit companies that rely on government servicing contracts. The deal is the latest example of the industry consolidating as a result.
Late last year, another government services contractor, Engility Holdings Inc, acquired TASC, a provider of professional services to government agencies, for $1.3 billion. TASC also had private equity owners, KKR & Co LP and General Atlantic LLC.
In its race to keep up with competitors such as Booz Allen Hamilton Holdings Corp, McLean, Virginia-based SAIC is seeking a presence and customers in all the major military departments and intelligence agencies.
Reston, Virginia-based Scitor offers engineering and management consulting services to customers that include the intelligence community, the Department of Defense and other federal, state and local agencies and commercial enterprises. Leonard Green acquired it in 2007 for an undisclosed amount.
SAIC reported net income of $181 million for the nine months to the end of October.
Sagent Advisors LLC and Latham & Watkins LLP are advising Scitor, while SAIC is working with Citigroup Inc and Arnold & Porter LLP.
Reporting by Mike Stone in New York; Editing by Cynthia Osterman