Yeah, I’m a little confused about what you’re asking. CSRA is a technology company that can help General Dynamics produce a more efficient, cheaper, and more secure digital infrastructure, particularly in relation the complex morass that is government procurement. That’s worth money.
From CNBC, “General Dynamics’s $40.75-per-share cash offer represents a premium of 32 percent to CSRA stock’s closing price on Friday.” So about a third more than the stock was already selling for. Based on the mergers I’ve seen reported, that doesn’t seem unreasonable.
I worked for CSRA , my company was bought by them. Like most military related companies in the DC area, it’s overrun with retired military types. Many of them retire and turn right around and do a very similar job working for a private business. My company did health research , after a few years they decided that did not fit so they sold that group off.
I think the (7) billion dollars got my attention and you say it’s not a lot … but then I thought how do they make their profit …
They can only charge Uncle Sam to pay the bills … General Dynamic’s I approve of due to the USN subs and ships they build, but I couldn’t understand the CSRA add on … it will make sense someday. Slick advertising for sure: https://www.csra.com/company
This is General Dynamics. Over their history they’ve integrated and spun off many different product areas. Historicaly, they’ve bought out other companies more frequently than my daughter changes outfits.
The major common factor is that whatever they buy out, they sell its products primarily to the US DoD. And if you have the products, the DoD has the money.
I feel like we need to start at step one. The military spends about $18 billion a year on ships. It spends about $45 billion a year on IT.
There are companies that provide the vast, vast amount of these goods and services to the military. The financial value of these companies is generally determined by the market, which is generally more transparent for a publicly owned company that trades stock on an exchange.
In this case, General Dynamics assessed that the intrinsic value of this company - its expertise in IT - would be a valuable addition to GD, which has expertise in other areas.
So GD surely looked at the value of CSRA’s stock, made offers to buy an ownership stake at a premium to the current trading price. The boards of the two companies finally reached a number that suited both companies.
Again, like the others, I think you need to define your question more precisely and clearly. Just saying, “(7) billion - what’s up with that?” is not helpful.