It's been well over two years since the epic tale of Lockheed's
Yesterday, for instance, we saw a reprise of the Lockheed/Titan portion of last year's saga, as fellow defense contractor General Dynamics
As was the case with Lockheed's bid for Titan, so too is the chorus already chanting in unison: General Dynamics is overpaying. The chorus has a point -- after all, the $55.50 buyout price alone offers a hefty 36% premium to Anteon's closing price Tuesday evening. But I think there is just as good an argument to be made that the General is not overpaying. Two arguments, actually.
First, valuation. Most analysts reviewing the terms of the deal have focused in on the price-to-sales ratio: 1.3. They point out that Anteon competitor CACI
To bring this column full circle, the second argument in favor of the General's bid is the same one I raised in explaining Lockheed's bid for Titan. Like Titan, Anteon brings its suitor a stable of thousands of security clearance-carrying employees. I said it last year and I'll say it again: To a defense contractor, these employees are worth their weight in gold. Their presence on General Dynamics' payroll will help the company secure more contracts from the Defense Department. Their pre-cleared status means they won't have to sit on their hands, awaiting clearance after a contract has been awarded. Forget Anteon as a company -- acquiring Anteon's employees alone might be worth a couple billion dollars.
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Fool contributor Rich Smith holds no position in any of the companies mentioned in this article. General Dynamics was a recommendation of Motley Fool Select, the precursor to The Motley Fool's small-cap newsletter,Motley Fool Hidden Gems. The Fool has a disclosure policy.