BAE to Buy DigitalNet Holdings

BAE Systems, Europe’s largest defense company, confirmed Sunday that it had agreed to acquire DigitalNet Holdings Inc. for $494.4 million to expand sales in the United States.

The transaction is expected to close in the fourth quarter, pending government approvals, BAE of London said. DigitalNet sells network security software to U.S. defense and intelligence agencies.

BAE would pay $30.25 for each share of DigitalNet of Herndon, Va., representing a 28% premium over Friday’s closing price of $23.56 on Nasdaq. BAE would assume $93.3 million in debt. The combined companies would have annual revenue of more than $1.2 billion in federal sector information technology.

Shares of DigitalNet have risen 39% in the 11 months since it went public. The company reported a second-quarter profit of $4.93 million, or 30 cents a share, on revenue of $97.6 million. That compares with a loss of $1.1 million, or 6 cents, on revenue of $82.4 million a year earlier.

BAE, which owns 20% of Airbus, has been unprofitable in three of the last four years.