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May 7, 2012
 
Transaction Analysis
UNICOM Systems, Inc to           Acquire GTSI Corp (NasdaqGM:GTSI)

 

Financial Overview:

  • Transaction Value: $76.7M
  • Transaction Structure: Cash
  • Enterprise Value: $34.4M
  • EV/Revenue: 0.10X
  • EV/EBITDA: N/A  

 

martinwolf Analysis:

  • UNICOM Systems Inc, a diversified company with strength in IBM hardware and software, has signed a definitive agreement to acquire GTSI, a provider of IT solutions to federal, state, and local government, through a cash tender offer at $7.75 per share, 47.9% above GTSI's closing stock price as of May 5, 2012.  Its book value, however, is in excess of $10/share.
  • The acquisition, if completed, will provide UNICOM with additional products and services that they can provide to their government and customer base.
  • GTSI's Board of Directors has unanimously approved UNICOM's offer, but has the right to accept proposals until June 6. The agreement contains break-up fees payable to UNICOM under certain circumstances, if terminated. Based on the offer of $7.75/share, a current strategic government reseller may be willing to pay more if they are able to maximize the revenue and cost synergies that they can bring to the table.
  • Two law firms (Brower Piven and Levi & Korsinsky LLP) have announced that they have been retained to investigate the board of directors of GTSI in connection with the sale of the company. The investigation focuses on whether the board breached its fiduciary duties by not extracting the highest price possible for shareholders while obtaining benefits for themselves.
  • The low offer price compared to tangible book value is indicative of the expensive, long-term lease on GTSI's headquarters, as well as the potential risk the buyer takes on relating to whether the conditions put in place by the Small Business Administration, which lifted the suspension against GTSI for alleged fraud, will remain in force.
  • If consummated, the acquisition of GTSI will be the first for UNICOM Systems in 2012, following the acquisitions of iET Solutions LLC, a provider of IT service and software asset management solutions, and illustro Systems International LLC, a provider of mainframe software, both in September 2011.

 

Please go here to read the press release.

 

martinwolf was not the adviser in this transaction.  

 

To learn more about this transaction or our firm, contact Tim Mueller tmueller@martinwolf.com

About martinwolf    

 

Based in Silicon Valley, martinwolf is a leading middle market M&A Advisory focused on companies with services-based business models. Since 1997, our team has completed more than 115 transactions in six countries. We are a five-year member of the Merrill Lynch PS Referral Network, and were selected as ICICI Bank's (India's leading private bank) exclusive strategic partner for acquiring U.S. IT companies. martinwolf is a member of FINRA and SIPC. For more information, visit www.martinwolf.com.

   

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martinwolf | M&A Advisors 2012    

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