Herndon-based GTSI last week said it has agreed to be acquired by an affiliate of California-based IT company Unicom Systems for about $76.7 million.
The deal caps a difficult period for GTSI, which has tried to shift course following a temporary suspension by the Small Business Administration in 2010. The company has sought to move from its traditional business as a computer hardware and software reseller into more services work, which company officials have said would be more profitable.
As part of that effort, GTSI bought Fredericksburg-based Information Systems Consulting Group last year.
Bob Kipps, managing director of the McLean-based investment firm KippsDeSanto, said the purchase by Unicom — which would turn GTSI private — would help the company make strategic change without the costs and risks associated with being a public company.
The firm has attracted unwanted attention “with investigations and with financial performance,” he said. “It’s kind of long overdue not to be a public firm.”
GTSI was suspended in 2010 after the SBA alleged it took part in a scheme that “resulted in contracts set aside for small businesses being awarded to ineligible contractors.” The suspension followed a Washington Post investigation that uncovered relationships between GTSI and three small businesses. The action was lifted when GTSI agreed to remove its chief executive and general counsel and turn over internal business documents.
Following the suspension, GTSI officials reported a difficult road. The company saw a significant number of its staff depart and it accumulated high legal costs. More recently, GTSI reported that its 2011 sales dropped nearly 47 percent from the previous year.
“We have not recovered as quickly or effectively as we had expected from the fallout of the SBA suspension last year,” Sterling Phillips, GTSI’s president and chief executive, said in a November call with investors.
Just days after announcing its acquisition offer, the company reported slightly improved results for the three-month period ending March 31. The company narrowed its profit loss to $2.5 million (26 cents a share), slightly less than the nearly $2.7 million (28 cents) lost in the same period a year earlier. Revenue grew 8.6 percent to $76.4 million.
Both GTSI and Unicom were tight-lipped about the deal. GTSI, citing regulatory requirements, declined to comment, while a Unicom spokesman would say only that the company “saw a great potential” in GTSI.
In its announcement last week, GTSI said the agreement was unanimously approved by a special committee of independent GTSI directors and the company’s full board of directors.
Under the deal, a Unicom subsidiary would pay $7.75 a share. The per-share price represents a premium of nearly 48 percent over GTSI’s closing stock price as of May 5, though the company’s stock has plummeted since 2007. In May 2007, the stock reached $13.77 a share but more recently has hovered at about the $5 range.
GTSI has until June 6 to solicit alternative proposals. The company said it is postponing its 2012 annual stockholders’ meeting indefinitely.