ACS Agrees to Buy Lockheed's IMS Unit
Affiliated Computer Services Inc., attempting to capitalize on the outsourcing of services by state and local governments, agreed to acquire Lockheed Martin Corp.'s IMS subsidiary for $825 million, company executives said.</br></br>Both boards have approved the transaction, which is expected to be announced this morning.</br></br>The deal is the largest acquisition by ACS, a Dallas company with $2 billion in revenue and 21,000 employees that was founded in 1988 and has become a leader in business-process outsourcing, handling back-office operations from processing health-insurance claims to loan and mortgage transactions. The sale is expected to generate as much as $550 million for Lockheed, Bethesda, Md.</br></br>IMS, with 4,800 employees, gets its roughly $580 million in annual revenue by performing a number of tasks for municipal and state government agencies, including administering welfare benefits, tracking down deadbeat dads and snaring red-light runners with strategically placed cameras. The unit is best known for operating E-Zpass, the electronic toll-collection service used by vehicles in the Northeast.</br></br>The acquisition bolsters ACS's position vying for government contracts against International Business Machines Corp., Armonk, N.Y., and Electronic Data Systems Corp. of Plano, Texas. ACS gets about one-third of its revenue from the federal government but has been less competitive on state and local government work.