INSIDE THE DEAL
Veritas subsidiary Peraton acquires Perspecta for $7.1bn
7 May 2021
Veritas Capital portfolio company Peraton has completed the acquisition of government IT services provider Perspecta in an all-cash deal of $7.1bn.
The latest acquisition was originally announced in January and follows Peraton’s acquisition of Northrop Grumman’s IT services business in February.
According to Veritas, the combination of Perspecta, Peraton, and Northrop Grumman’s IT business will create a leading government IT provider capable of providing end-to-end capabilities in IT and mission support.
Peraton chairman, president and CEO Stu Shea said: “The new Peraton represents a truly transformative change for the industry, our customers, and each one of our employees.
“We have the right team, the right technology and the right scale to deliver against the biggest challenges facing government. Our highly skilled and diverse team provides secure, repeatable and differentiated solutions aligned to our customers’ goals.
“We will fuse mission-enabling services with market-leading enterprise offerings and solutions to identify the best use of new technology and help customers achieve positive business outcomes.”
The new company will function as Peraton and will be led by Stu Shea.
Peraton said that it had aligned the new company around nine business organisations, namely Space and Intelligence, Cyber Mission, Defense Solutions, Citizen Security and Public Services, Global Health and Financial Solutions, Peraton Labs, Navy and Marine Corps, SRI, as well as System Engineering.
The Veritas-backed firm has annual revenues of about $7bn, a current backlog of approximately $24.4bn, and a three-year qualified pipeline of $200bn. Peraton employs a workforce of 22,000 members.
Veritas CEO and managing partner Ramzi Musallam said: “With unparalleled capabilities and a deep bench of highly skilled employees, the combined Peraton is poised to drive enhanced value for all of its stakeholders.
“We look forward to investing in the long-term success of the unified enterprise and to working closely with Stu and management to support our customers’ most vital missions.”
Controversy remains over the deal
When the State Department gave Congress informal notice of the potential deal last month, Chairman of the House Committee on Foreign Affairs Representative Eliot L. Engel said that the sale “would significantly change the military balance in the Gulf and affect Israel’s military edge” adding that rushing approval of the deal was “not in anyone’s interest”.
Engel added: “My consideration of this sale will include several factors. First, we must maintain Israel’s qualitative military edge, as provided in US law, and ensure Israel’s military superiority in the region, as Israel remains our most crucial ally there. Israel currently has exclusive access in the region to the F-35, which has guaranteed its military edge over the last several years. As Congress reviews this sale, it must be clear that changes to the status quo will not put Israel’s military advantage at risk.”
The lawmaker said that increased activity from Russia and China in the Middle East meant that Congress would need ‘unimpeachable assurances’ that the fighter’s advanced technologies would be safeguarded. He added that a sale to the UAE would ‘inevitably’ generate demand for the jet from other neighbouring countries. In October, Qatar made a formal request to purchase the F-35.
Senate Foreign Relations Committee Ranking Member Senator Bob Menendez said: “As feared, the details of this proposed sale suggest President Trump is seeking to rush through an increase of complex weapons systems into a volatile region seemingly without serious consideration of US interests or the legal parameters of Israel’s qualitative military edge.
“Claiming Israel will maintain its edge while offering Abu Dhabi the same number of these sophisticated stealth warplanes as Israel simply does not add up. Recklessly accelerating the timeline around a reportedly artificial deadline precludes sufficient consideration of these issues by the national security professionals in the Departments of State and Defense.”
Menendez added: “Congress has statutory authority over foreign arms sales and our responsibilities will not be relinquished. The American public has a right to insist that the sales of US weapons to foreign governments – especially those of this magnitude and lethality – are consistent with US values, our national security objectives, and the safety of our closest allies.
“The Trump administration’s refusal to answer our questions about how the national security interests of both the US and Israel will be served, or undermined, by such a sale is a sure-fire way not to get Congressional support to move forward with this sale.”
Will President-elect Biden change course?
After the potential F-35 sale became public in October, Anthony Blinken, a Foreign Policy Advisor to Biden and former Obama-era official, was reported by the Jerusalem Post as saying that he had ‘concerns’ about what commitments the US Government may have made to the UAE.
Since then, US President Donald Trump lost his re-election bid, with President-elect Joe Biden set to take office in January. Democrat Senator Chris Murphy said that the Trump administration approving the sale after losing the election was “completely inappropriate”, adding: “It's a transparent attempt to narrow options in the Middle East for President-elect Biden when he takes office.”