NEW YORK (Reuters) – LBO firm Carlyle Group is buying a majority stake in the U.S. government business of Booz Allen Hamilton Inc. for $2.54 billion, the management consulting technology firm said on Friday.
Under the deal, McLean, Virginia-based Booz Allen said it will split in two, separating its U.S. 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 U.S. government.
The deal was unanimously recommended by Booz Allen’s board of directors, the company said. Booz Allen was advised by Credit Suisse and Latham & Watkins. Carlyle was advised by Debevoise & Plimpton LLP.
When reports of a potential deal came out in January, the Service Employees International Union criticized such a deal, saying it raised concerns about national security because Carlyle is minority-owned by an investment unit of the Abu Dhabi government. Carlyle in September sold a 7.5 percent stake to the Abu Dhabi group.
(Reporting by Megan Davies, editing by Dave Zimmerman)