Comarco, Big Competitor Form New Company : Merger: The transaction is based on a stock swap. Both firms have roots in the defense contracting business.
Comarco Inc. has agreed to a stock-swap merger with CACI International, a competitor twice its size, the companies said Tuesday.
The name of the combined company will be Comarco International Inc. It will have annual revenue of about $220 million and 3,300 employees, said Jack London, chief executive of CACI at its Arlington, Va., headquarters.
Don M. Bailey, chief executive of Anaheim-based Comarco, will become chief operating officer and president of the new company, while London will become chairman and chief executive. The board of the new firm will include four Comarco directors and four CACI directors.
Sam Stickland, chief financial officer for CACI, said that decisions have not been made yet about where the combined company will be based. He said there is little overlap in the operations of the companies, so for the time being both headquarters will continue operating.
Both companies have roots in the defense business. Comarco manages weapons testing ranges for the military, but lately it has branched out. It manages the taxicab and parking systems at airports such as National Airport in Washington, runs quality tests of cellular phone networks, and builds emergency roadside call boxes. CACI has similar management and engineering services, about 50% of them military-related.
London said the new company will focus on information technology. CACI this month won a $223-million contract, he said, to supply computer services to the U.S. Justice Department.
Under terms of the merger, holders of Comarco’s stock will receive 1.075 shares in the new company for each share they hold now, while CACI investors will receive one new share for each current share. That will leave CACI shareholders with about two-thirds of the stock.
Mark Matheson, an analyst at investment bank Crowell, Weedon & Co. in Los Angeles, said that may be why Comarco’s stock dropped 87.5 cents to $5.125 a share in NASDAQ trading on Tuesday. CACI rose 25 cents a share to close at $4.50.
“Comarco has a better earnings record than CACI, but their shareholders get less control,” Matheson said.
CACI reported a profit of $4.2 million, or 40 cents a share, for its latest fiscal year. Comarco reported earnings of $3.3 million, or 60 cents a share, for its latest year.
The companies said they expect to sign a final deal by May 17 and complete the transaction by July 31. The merger is subject to approval by the directors and stockholders of both companies.
CACI also said it will settle two pending shareholder lawsuits related to a 1990 takeover offer.
