Support services group Serco has revealed its plans to acquire SI International, a NASDAQ-listed provider of information services, outsourcing, technology and network solutions to the US Department of Defense and civil government agencies, for $423 million (£229 million).

Support services group Serco has revealed its plans to acquire SI International, a NASDAQ-listed provider of information services, outsourcing, technology and network solutions to the US Department of Defense and civil government agencies, for $423 million (£229 million).

The $32-a-share deal will enable Serco to expand its operations in the US government services market worth an estimated $290 billion. Serco North America and SI International will have combined revenues of $1.23 billion.

The price tag represents a 40 per cent premium to SI International’s closing share price on 26 August, valuing the company at $510 million – 12.3 times EBITDA.

The deal will be funded from £700 million of “new fully committed multi-currency bank facilities”, which will also refinance the company’s existing bank debt. Returns are expected to meet Serco’s cost of capital in the third year of ownership.

Serco Group chief executive Christopher Hyman said: “The acquisition of SI International will significantly expand the scale and potential of Serco’s North America operations.

“Our capabilities are highly complementary and together we will create a stronger organisation that will have customers across all the US Armed forces, the US Intelligence Services and a number of Federal Government agencies.

“Since entering the North American market in 1993, Serco has built up its portfolio of businesses in the US, Canada and Bermuda that serve the federal, state and local goverment sectors.