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Booz Allen (BAH) Completes Buyout of Liberty IT Solutions

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Booz Allen Hamilton Holding Corporation (BAH - Free Report) yesterday announced completion of the acquisition of Liberty IT Solutions, a Herndon, VA-based IT and services firm that specializes in federal health IT tools, platforms and systems. The transaction price of $725 million includes excess cash on hand and net proceeds from Booz Allen’s $500-million debt offering announced on Jun 7, 2021.

The acquisition is anticipated to be immediately accretive to Booz Allen’s adjusted EPS, adjusted EBITDA margin and adjusted growth rate. Liberty, with around 600 solution architects, engineers and other technical employees, will function as a Booz Allen company and will be a part of the latter’s Civilian Services Group.

Notably, Booz Allen’s shares have gained 12.2% over the past one year, underperforming the 21.1% rally of the industry it belongs to.

Acquisition to Strengthen Booz Allen’s Digital Capabilities

The buyout is expected to amplify Booz Allen’s digital solutions capabilities, enlarge its talent base, strengthen its service delivery model and increase its capability to provide a profound range of advanced and scalable technology solutions, and digital expertise. Liberty will increase Booz Allen’s capacity to provide end-to-end digital solutions, a broader suite of strategic Salesforce capabilities and transformative technologies.

Horacio Rozanski, Booz Allen’s president and chief executive officer, said, “The addition of Liberty strengthens our unique market position as a leader in digital transformation, accelerates already robust growth in our health business and beyond, and delivers value for our people, our clients, and our shareholders.”

Zacks Rank and Stocks to Consider

Booz Allen currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector includes Equifax Inc. (EFX - Free Report) , Cross Country Healthcare (CCRN - Free Report)  and Charles River Associates (CRAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Equifax, Cross Country Healthcare and Charles River is pegged at 14%, 10.5% and 15.5%, respectively.

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