Nortel Networks Corp. said Tuesday it's buying PEC Solutions, an information technology firm based in Virginia that serves the U.S. government. Nortel will pay $448 million US in cash.
It's the biggest acquisition in more than four years for Nortel, which became famous during the dot-com boom by buying dozens of companies, often by issuing its own shares.
Tuesday's deal, though, is all cash. Nortel said it will pay $15.50 cash for each share of PEC, which closed at $11.31 on the Nasdaq on Monday.
Nortel expects the acquisition will boost its earnings beginning in 2006. Its shares slipped 2 cents to close at $3.49 on the TSX.
"This acquisition will aggressively position Nortel in the U.S. federal government IT market," said Bill Owens, Nortel's CEO, in a release.
"This market is characterized by consistent and steady growth," he said.
Based in Fairfax, Va., PEC employs about 1,700 people in nine states.
PEC is a 20-year-old firm that sells information technology to security, law enforcement, intelligence, defence and civilian agencies of the U.S. federal government.
PEC's customers include the U.S. Secret Service, U.S. Coast Guard, Office of the Chief Information Officer for Homeland Security, the Federal Bureau of Investigation, and Immigration and Customs Enforcement.