Carlyle To Buy Booz Allen Gov’t. Biz

Target: Booz Allen Hamilton Federal Government Contracting Division

Price: $2.54 billion

Sponsor: Carlyle Group

Seller: Booz Allen Hamilton

Carlyle Group is betting on the public sector by agreeing to buy a majority stake in the federal government business of consultantcy Booz Allen Hamilton Inc. for $2.54 billion.

Under the deal, McLean, Virginia-based Booz Allen said it will split in two, separating its government business from its global commercial businesses. The commercial business will be a stand-alone company. The deal is expected to close in mid to late 2008. Booz Allen sells management consulting, engineering, information technology and other services to the federal government.

When reports of a potential deal came out in January, the Service Employees International Union criticized the move, saying it raised concerns about national security because Carlyle Group is minority-owned by an investment unit of the Abu Dhabi government. Carlyle Group in September sold a 7.5 percent stake to the Abu Dhabi group.

(Reporting by Reuters News Service.)