A $603 Million Deal Sheds Light on Cybersecurity Space

(Bloomberg) -- In a deal that puts a spotlight on the shadowy world of cyberwarfare, Jacobs Engineering Group Inc. agreed to acquire KeyW Holding Corp. for about $603 million, increasing its number of employees with top-secret government access by 50 percent.

While neither company is a household name, both have deep ties to Washington’s web of cyberintelligence specialists. Jacobs, a Dallas-based engineering firm with more than 80,000 employees, already gets about 23 percent of its $15 billion in annual revenue from the U.S. government. In the past three years, Jacobs has acquired two other cybersecurity firms in the greater Washington area -- Reston, Virginia-based Blue Canopy and Columbia, Maryland-based Van Dyke Technology Group Inc.

KeyW, which was valued at $393.4 million at the close of trading last week, was founded by a former National Security Agency senior manager who became a senior executive at Essex Corp., a government defense and intelligence contractor that was acquired by Northrop Grumman in 2007. It counts a former NSA director, deputy director and chief of staff among its board members.

The companies have been on the radar of some of the biggest investment funds. Vanguard Group, State Street Corp. and BlackRock Inc. are among the top holders of both companies’ stock.

Along with protecting information for the government, KeyW’s website promises to help clients design “offensive cyberspace operations” and training for “cyber missions.” The Hanover, Maryland-based company, with 1,790 employees, also helps governments collect intelligence data via aircraft and satellites.

Including debt, the companies value the deal announced Monday at $815 million. Jacobs will pay $11.25 in cash for each share of KeyW, a 43 percent premium over the company’s share price at the end of last week. KeyW rose as much as 43 percent, the most ever, to $11.23. Jacobs rose less than 1 percent to $77.65 at 11:10 a.m. in New York.

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Molly Schuetz

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