Carlyle to Swallow Booz Unit

The private-equity firm will pay $2.54 billion for the consulting giant's government contract business, while Booz Allen's commercial business will...
Stephen TaubMay 16, 2008

The Carlyle Group has agreed to buy a majority stake in the U.S. government business of management-consulting firm Booz Allen Hamilton for $2.54 billion. In addition, Booz Allen will spin off its commercial business into a stand-alone company focused on global management consulting. The realignment will enable both Booz Allen businesses, government and commercial, to refocus on their distinct end markets, the company says.

“This separation of our core businesses marks a dynamic new chapter in our history,” says Ralph Shrader, the firm’s chairman and CEO. “As a stand-alone company, the new commercial and international business will have greater agility to meet the needs of its client base, maximize its potential, and realize significant growth across the globe.”

The transaction, expected to close in mid or late 2008, is Carlyle’s largest deal since the credit crunch all but dried up buyout activity starting last summer. Observers will no doubt watch whether it signifies a turning point for deals that rely on leverage.

Carlyle has $81.1 billion under management with 60 funds. In addition to management consulting, Booz Allen provides engineering, information technology, and systems development and integration services.