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Defense spending
boosts Anteon
by
Robert Burke
Virginia
Business
March 2003
Joseph Kampf has helped Fairfax-based Anteon International
get very big. The government contracting giant had revenues
last year of more than $800 million. But that’s
not enough, apparently, in the supercharged defense
and security sector. With the federal government pouring
money into homeland security, Kampf says Anteon is aiming
for the $1 billion club.
A
big reason for the growth is that the government wants
contractors who can do it all, says Kampf, Anteon’s
president and CEO. “When I started in the 1980s
in this sector a large [contract] was $25 million. Today
you see... $500 million to $1 billion almost routinely,”
he says. “You’re going to see these large
[contracts] going to branded companies with quality
reputations and companies that have achieved critical
mass,” he says. “We definitely intend to get
larger.”
It
could be a wild ride for the company and others in this
sector, which is enjoying a wave of funding and consolidation.
Kampf has Anteon in pretty good shape. The company went
public last March, selling 15 million shares priced
at $18 apiece. By May its stock had jumped 22 percent,
peaking in mid-October at just over $29. Lately it’s
been hovering at just above $22. Most analysts rate
the company a strong buy, according to a Washingtonpost.com
site. Its stock value makes it a good candidate to buy
up smaller companies.
Kampf
has been watching his competitors grow as well. Reston-based
DynCorp was bought by Computer Sciences Corp. of El
Segundo, Calif. Arlington-based Veridian Corp. took
a big step forward last August with its $227 million
acquisition of Signal Corp. Industry leaders include
Lockheed Martin, which had revenues of about $3.8 billion
last year, Northrop Grumman and TRW. There were 202
mergers and acquisitions in the sector last year, compared
with 156 in 2001, according to a report by the Washington
office of investment banking firm Houlihan, Lokey, Howard
and Zukin. Federal Sources Inc. of McLean predicts the
federal contracting market will grow 10 percent this
year to $53.1 billion.
With
the emergence of terrorists threats and the creation
of the new Department of Homeland Security the keyword
now is interoperability — enabling communications
and information sharing across different government
agencies. Kampf says Anteon’s existing contracts
give it a foothold there. “We’re already there.
We’ve been there for a long time,” he says.
It built and still operates NATO’s intelligence
network, called Linked Operation Centers Europe. It
also built FEMA’s IT system for responding to natural
disasters. FEMA is now under the new homeland security
office.
Anteon
was founded 26 years ago and by 1996 had $109 million
in revenue. That year New York-based private equity
firm Caxton-Iseman Capital Inc. bought the company for
$45 million. Kampf was hired, and since then the company
has made five acquisitions and now has about 5,600 employees
in 80 locations. About 90 percent of Anteon’s business
is for the federal government. The U.S. Navy alone accounts
for 40 percent. It anticipates revenue this year to
grow at least 13 percent with a profit of $1.03 to $1.05
per share. And it will be hunting for acquisitions among
the hundreds of smaller and more specialized contractors,
Kampf says. “We look for very special things in
companies we acquire. I think there’s a lot of
opportunities there.”
Virginia
Business - March 2003
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