Nortel to buy PEC Solutions
Nortel Networks today announced that it has agreed to acquire PEC Solution for about $448 million as part of its efforts to focus on the federal-government marketplace.
Chuck Saffell, Nortel Networks’ president of federal networks solutions, said the deal–to be completed in June–would result in the creation of a new entity called Nortel PEC Solutions. The merger will let Nortel accelerate its federal-government initiatives, Saffell said.
“We can leverage their [PEC Solutions’] professional services, and they can leverage our technical expertise to come up with unique solutions to the challenging problems faced by our government today, PEC Solutions CEO David Karlgaard said his company provides information-technology solutions to various government agencies, including the Department of Homeland Security, the Department of Justice, the Department of Defense and intelligence agencies.
“We’re a good mid-market player, but we’re not a big enough player to take on the largest projects in the space,” Karlgaard said. “Now, we think we have the ability to tackle nearly every project that comes along.”
Saffell echoed this sentiment, noting that PEC Solutions’ project-management expertise means the new merged entity can serve as the prime contractor for most government projects. Currently, Ontario-based Nortel typically cedes that role to partners, he said.
Virginia-based PEC Solutions has 1700 employees, including many with the high level of security clearance necessary to work on the government’s more sensitive projects, Saffell said.
“We’ve been able to compete for projects, but it’s cumbersome–there’s a drag on it because of our Canadian heritage,” Saffell said. “Now, with the merger, we will look like any other U.S. company and will be able to shed those bounds.
Nortel said it would pay $15.50 per share for PEC Solutions, which saw its stock close Monday at $11.31 per share, according to a report in the Wall Street Journal.
