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Kforce Agrees to Sell Federal Government Solutions to ManTech

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Kforce Inc. (KFRC - Free Report) is selling its federal government solutions business — Kforce Government Solutions, Inc. (KGS) — to ManTech International Corporation (MANT) for an aggregate cash purchase price of $115 million.

The company entered into a stock purchase agreement with ManTech on Feb 28, which is expected to close by Mar 31. More than 500 KGS employees will join ManTech.

The sale does not include Kforce’s federal government product business TraumaFX, for which strategic alternatives are being explored.

Kforce to Increase Focus on Core Businesses

The divesture will enable Kforce simplify business model and increase focus on the core Technology and Finance and Accounting businesses. Net proceeds from the sale after taxes and transaction cost are expected to be around $90 million, which will be used for share repurchases.

The company expects that improved profitability and repurchases will make the divesture EPS neutral or better on an annualized basis.

We firmly believe in the strong secular drivers within the commercial technology space and, with this divestiture, virtually all of our revenues are derived from domestic professional and technical staffing services and solutions,” said David L. Dunkel, Chairman and Chief Executive Officer of Kforce.

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ManTech to Deliver Through T4NG Program

ManTech will be able to enhance footprint with the Department of Veterans Affairs (VA) and deliver services through the government’s Transformation Twenty-One Total Technology Next Generation (T4NG) program.

The program is a 10-year indefinite delivery, indefinite quantity (IDIQ) contract that the VA Technology Acquisition Center (TAC) has awarded to enable the VA transform information technology programs.

The company expects that the buyout will to be slightly accretive to EPS in 2019.

Zacks Rank & Other Stocks to Consider

Currently, Kforce carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector are Omnicom (OMC - Free Report) , Robert Half (RHI - Free Report) and Automatic Data Processing (ADP - Free Report) , all carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Omnicom, Robert Half and Automatic Data Processing is 6.9%, 8.4% and 12.8%, respectively.

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