CSRA Csra Inc.

By Austen Hufford 

CACI International Inc. withdrew its bid for CSRA Inc., paving the way for the General Dynamics Corp. deal to continue.

Last week General Dynamics raised its offer for CSRA Inc. after CACI submitted an unsolicited bid for the fellow federal information technology provider.

CACI was trying to prevent a tie-up between General Dynamics and CSRA as companies supplying the Pentagon and other government agencies with IT and analytic services search for greater scale. While the deal is now back on track, General Dynamics was forced to up its offer for CSRA.

"We will continue our aggressive pursuit of strategic opportunities, judiciously and without engaging in auctions at uneconomic levels," CACI Chief Executive Kenneth Asbury said.

General Dynamics' latest bid was for $41.25 a share in cash, valuing its target at $6.9 billion.

CACI wasn't able to overcome the bid from the much-larger General Dynamics, which has a market capitalization of about $65.9 billion, compared with CACI's $3.67 billion.

Investors also expressed concerns about the debt CACI would have had to take on to finance its deal.

General Dynamics has already secured antitrust approval for its proposed deal, which would create one of the largest government IT providers, with annual sales of almost $10 billion.

Some analysts have said that more deal making in the already consolidated sector would continue as government departments opt to award larger, enterprisewide contracts.

In premarket trading, CSRA shares fell 0.1% while CACI and General Dynamics shares were inactive.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

March 28, 2018 09:14 ET (13:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.