Government contractor Engility to buy TASC in $1.1 billion all-stock deal

Government contractor Engility Holdings Inc. said Tuesday it plans to acquire TASC Inc. in an all-stock deal valued at $1.1 billion, including debt.

The companies said Tuesday that the deal will create a leading government services provider with combined annual revenue of roughly $2.5 billion. The deal has been approved by the boards of both companies and is expected to close in the first quarter of 2015.

TASC provides professional services for national security with a significant presence in niche markets, such as intelligence community and space, where Engility in underrepresented. It is controlled by affiliates of Kohlberg Kravis Roberts & Co. L.P. and General Atlantic LLC. Engility provides services including information technology and logistics management. Both companies are headquartered in Chantilly, Virginia.

Under the terms of the agreement, the combined company will maintain the Engility name but will serve customers under both the Engility and TASC brands.

Engility stockholders will receive a special cash dividend of about $11.40 per share for each Engility share they own. TASC stockholders will receive about 18.9 million shares of Engility Holdings, representing an approximately 51 percent ownership stake in the combined company.

Shares of Engility jumped 4.2 percent to $39.20 in extended trading following the announcement of the deal and a better-than expected third-quarter profit.