Carlyle Pays $2.54 Billion for Part of Booz Allen; McLean Firm Hoping Buyout Will Help Company's Growth

The Washington Times (Washington, DC), May 17, 2008 | Go to article overview

Carlyle Pays $2.54 Billion for Part of Booz Allen; McLean Firm Hoping Buyout Will Help Company's Growth


Byline: Kara Rowland, THE WASHINGTON TIMES

D.C. private equity firm Carlyle Group said yesterday it is buying the government contracting business of Booz Allen Hamilton Inc. for $2.54 billion - one of the few major buyouts to be announced since the credit crunch took hold last July.

Booz Allen, a McLean technology and management consulting firm, employs 13,000 people in its government contracting business, which is going to be separated from its commercial consulting business.

Booz Allen thinks separating the companies will help them both grow.

"As a stand-alone company, the new commercial and international business will have greater agility to meet the needs of its client base, maximize its potential and realize significant growth across the globe," Booz Allen Chairman and Chief Executive Officer Ralph Shrader said.

The company's government consulting business has been profitable - it has contracts with the Department of Defense, the Department of Homeland Security and the World Bank - but economist Peter Morici said the sale is a good way "to raise cash to invest in private contracting."

"More money can be made in private contracting if a company has the right services to sell. Also, additional cash could help it expand further overseas," said Mr. Morici, a professor at the University of Maryland's Robert H. Smith School of Business.

Carlyle, which last year sold a minority stake in itself to an Abu Dhabi investment firm, said it won't have access to classified information or even play a management role in Booz Allen. …

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