Perspecta shares closed 9.7% higher on Jan. 27 after the US government services provider agreed to be acquired by Veritas, in an all-cash deal worth $7.1 billion. The transaction is expected to close in the first half of this year.
As part of the transaction, Perspecta (PRSP) shareholders will receive $29.35 in cash for each share, representing a premium of 11.8% to the stock’s closing price on Jan. 26. Investment firm Veritas already owns a 14.5% stake in the government services IT (Information Technology) contractor.
Perspecta CEO Mac Curtis commented, “Having considered all opportunities available, the Perspecta Board of Directors is confident this transaction offers the most compelling value creation for shareholders.”
“As a private company supported by Veritas, Perspecta will be well positioned to build on our momentum and continue executing on customer commitments as Perspecta delivers cyber, digital-transformation and mission-focused solutions.” Curtis added.
Perspecta had revenues of $1.1 billion at the end of its most recent second quarter of FY21. The closing of the acquisition will result in creating a federal technology provider that provides end-to-end solutions in IT.
Following the deal announcement, Cowen & Co. analyst Gautam Khanna reiterated a Hold rating on Perspecta stock and a price target of $26.
Khanna wrote in a note to investors that the takeover “price appears full at 11.4x F21 EV/EBITDA ex NGEN [Next Generation Enterprise Network], and thus we do not expect a “top tick” bid to arise.” (See PRSP stock analysis on TipRanks)
The rest of the Street is in line with Khanna’s outlook with a Hold consensus rating. That’s based on one analyst recommending a Buy, 2 analysts suggesting a Hold including Khanna and one analyst suggesting a Sell. The average analyst price target of $26.59 implies 7.7% downside potential to current levels.