General Dynamics (GD) has acquired federal information technology services provider CSRA in a $9.7bn all-cash deal.

CSRA will become a part of General Dynamics Information Technology, intending to create a premier high-tech IT provider for the government market.

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According to GD, the transaction is expected to add to GAAP earnings per share and to free cash flow per share next year.

In addition, it is anticipated to generate annual pre-tax cost savings of nearly 2% of the combined company’s revenue by 2020.

“The acquisition follows CACI’s announcement last month that it withdrew its offer to acquire all outstanding shares of CSRA for $7.2bn.”

General Dynamics chairman and chief executive officer Phebe Novakovic said: “The combined CSRA and GDIT offers innovative, competitive and compelling solutions to our customers, and provides attractive free cash flow coupled with good incremental return on capital for investors.

“GDIT is positioned to deliver cost-effective, next-generation IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies as they modernise their information systems.”

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The acquisition follows CACI’s announcement last month that it withdrew its offer to acquire all outstanding shares of CSRA for $7.2bn, along with the $2.8bn in assumed debt.

CACI backed down after GD renewed its offer by increasing its bid to $9.7bn, including $2.8bn in CSRA debt, which was accepted by CSRA’s board.