BAE buys IT supplier to Pentagon

DigitalNet makes secure computer networks for US defence agencies

UK defence giant BAE has acquired a leading American IT supplier to the Pentagon at a cost of $600m (£334m).

Virginia-based DigitalNet provides services to US federal government agencies, including the Departments of Defense and Homeland Security.

BAE said the deal would boost earnings within a year of its completion.

It said its North America operations would now generate revenues of more than $1.2bn from selling IT systems to US government agencies.

The acquisition of DigitalNet will be an important step in enhancing the capability of BAE Systems North America to better serve its customers Mike Turner, chief executive BAE See BAE's latest share price

In addition to the Pentagon, DigitalNet makes secure computer networks for national intelligence agencies and the Departments of Justice, Treasury and State.

DigitalNet recorded sales of $292m in 2003.

Each year BAE generates $5bn in North America from the sale of technology to the US government and commercial customers.

"Our North American business currently accounts for more than 20% of group sales and profits, with 10% organic sales growth annually," said BAE chief executive Mike Turner.

"The acquisition of DigitalNet will be an important step in enhancing the capability of BAE Systems North America to better serve its customers."

Last week BAE reported a 4.5% rise in underlying operating profit during the first six months of 2004.