DigitalNet Inc., a privately held technology company in Bethesda, said yesterday that it completed the $223 million acquisition of a U.S. unit of Europe's third-largest computer services company.
The deal for Getronics Government Solutions - which included $35 million in preferred stock and the rest in cash - was funded partly by a bank loan and partly by a Chicago-based private equity firm, GTCR Golder Rauner LLC.
"We view this opportunity as a classic example of what we do, which is backing exceptional management teams in industries that we think have the right fundamentals in terms of growth and scale," said Craig A. Bondy, a vice president at GTCR. "And for our situation with [DigitalNet President and Chief Executive Officer Ken] Bajaj in particular, he's an executive who we've been partners with in the past."
Bajaj, an electrical engineer who holds a doctorate in systems science, founded DigitalNet in 2001, just a few days before the Sept. 11 terrorist attacks. Its services range from building a company's computer networks and putting up firewalls to making sure that connections are secure between a company's computer systems in two different cities.
Getronics does the same thing, focusing on government clients. It is the Herndon, Va.-based subsidiary of Getronics International NV.
"This acquisition gives us a platform company for the government business because 100 percent of Getronics Government Solutions' business is with the government," Bajaj said yesterday.
Bajaj said DigitalNet's goal is to have 40 percent of its business coming from the government, 40 percent from the commercial sector and 20 percent from the international market.
GTCR previously worked with Bajaj when it helped fund AppNet Inc., a Bethesda Internet consulting firm he founded. Bajaj took that company public in 1999 and then sold it in 2000 for $2.1 billion in stock.
Before launching AppNet, Bajaj and his wife founded I-NET Inc., a Bethesda-based technology company that was bought in 1996 by Wang Laboratories Inc. for $167 million. Netherlands-based Getronics International later bought Wang Laboratories.
"It's kind of homecoming for me," Bajaj said yesterday of his latest deal.
Bajaj plans to expand DigitalNet through acquisitions. The holding company has five employees at its Bethesda headquarters, and plans to keep its new subsidiary, renamed DigitalNet Government Solutions, headquartered in Northern Virginia.
DigitalNet Government Solutions has about 1,700 workers in the region surrounding Washington, including 88 in the Baltimore area. Bajaj said the company plans to take the subsidiary public sometime next year and then begin pursuing an acquisition to break into the commercial market.