2010’s Acquisitions Wave: Cash is Back

Harris Corporation’s acquisition of privately-held CapRock Communications for a reported $525 million in cash is the latest in a series of major cash acquisitions, proving that, even if credit is still tight, cash is back.

CapRock’s customer base includes energy sector giants Chevron and Halliburton as well as DoD.  Howard L. Lance, chairman, president and CEO of Harris said of the acquisition: “Acquiring CapRock expands our international presence and customer base, while increasing the breadth of our assured communications offerings…the acquisition provides an entry into the energy market, while expanding our present offering for the government and maritime markets to include managed satellite communications solutions.”

Also, last week saw Symantec’s $1.28 billion cash bid to take over most of VeriSign’s security services.  Symantec will even change its iconic logo to include VeriSign’s signature check mark.  Whether the gamble will pay off in terms of ROI remains to be seen, but the potential synergy of Symantec’s Software-as-a-Service model and Symantec’s $300 million April acquisition of privacy and authentication firm PGP could pay big dividends.

Now, VeriSign’s certificate services can combine with PGP’s cryptological prowess and Symantec’s service delivery model to provide a whole new range of secure services and fill a void in Symantec’s security portfolio.  Also, since the security market is evolving to a more comprehensive model, Symantec’s expansion makes a lot of sense.

“With the anonymity of the Internet and the evolving threat landscape, people and organizations are struggling to maintain confidence in the security of their interactions, information and identities online. At the same time, people's personal and professional lives have converged and they want to use their various digital devices to access information wherever they are without jeopardizing their privacy,“ said Enrique Salem, president and CEO, Symantec in a press release.

Also recently, CGI announced plans to buy Stanley for $1 billion in cash this month and DynCorp was bought in April by Cerberus Capital Management for $1.5 billion in cash, following Cerberus’ unsuccessful foray into the American auto business.  After a long drought for cash acquisitions, with companies focusing on stock swaps and organic growth, the fact that firms are willing to bet working capital on billion-dollar acquisitions is a welcome sign of stability in the government contracting market.

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