DynCorp Going Private

The guys that once owned Chrysler have decided that owning a defense contractor with security contracts is a better deal.

DynCorp International, a Falls Church-based government contractor that does work for the military in Iraq and Afghanistan, said Monday that it has agreed to be acquired by private-equity firm Cerberus Capital Management in a deal valued at $1.5 billion.

The agreement has been approved by DynCorp's board of directors but requires a vote by the company's investors. Under the transaction, which also includes the assumption of debt, shareholders would receive $17.55 in cash for each share of common stock they own, representing a premium of nearly 50 percent over Friday's closing price.

The deal comes as DynCorp has expanded its business by winning key contracts to provide technical and professional services overseas, including security, drug eradication and law enforcement training. In its third fiscal quarter, ended Jan. 10, the company reported revenue of $915 million, up 15 percent from a year earlier.

But some of DynCorp's work in Iraq and Afghanistan has drawn scrutiny from Capitol Hill and government watchdog groups.

Last year, the company disclosed that it may have violated the Foreign Corrupt Practices Act when it tried to speed up the process for getting visas and licenses for U.S. government work overseas. DynCorp has also faced questions over its training of the Afghan national police and its spending on a multibillion-dollar contract to train Iraqi police.

Analysts say the Cerberus deal, which would convert publicly traded DynCorp to private ownership, could take some of the spotlight away from the company's war-zone work.

By: Brant