(Reuters) — Buyout firm Apollo Global Management LLC (APO.N) is in the lead to acquire U.S. government services provider PAE in a deal that could value it at close to $900 million, including debt, people familiar with the matter said on Friday.
Apollo has so far prevailed in an auction for PAE over private equity firms American Securities LLC and Platinum Equity LLC, the people said. Apollo is still negotiating terms with PAE’s owner, buyout firm Lindsay Goldberg & Co LLC, and there is no certainty it will finalize a deal, the people added.
The sources asked not to be identified because the negotiations are confidential. PAE, Apollo, Platinum Equity and American Securities declined to comment. A Lindsay Goldberg representative did not immediately respond to a request for comment.
Arlington, Virginia-based PAE provides the U.S government and other countries with support in aviation, logistics and training, around the world. Its clients include the U.S. Department of State mission in Iraq in its Baghdad Embassy Compound and the U.S. Consulate General in Basrah.
Buyout firms, as well as defense contractors such as Lockheed Martin Corp (LMT.N), have been shedding their low-margin government services because company valuations are recovering as government spending, which took a nosedive following the end of the wars in Iraq and Afghanistan, begins to stabilize.
Earlier this week, L-3 Communications Holdings Inc (LLL.N) said it would sell its government services division, National Security Solutions, to smaller defense contractor CACI International Inc (CACI.N) for $550 million in cash.
Lockheed Martin sold PAE to New York-based Lindsay Goldberg in 2011 for around $350 million, Reuters reported at the time.
Founded in 1955, PAE has attempted in recent years to move into more sophisticated segments of government services through acquisitions. In January, PAE acquired a unit of US Investigations Services LLC which offers litigation support and biometric capture as well as construction surveillance and security consulting.
PAE employs 15,000 people in over 60 countries.
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