SRA International Sued by Investor Over $1.88 Billion Buyout

SRA International Inc. (SRX), a provider of computer services to the U.S. government, was sued by an investor seeking more money in a $1.88 billion takeover by Providence Equity Partners LLC.

SRA founder Ernst Volgenau “opportunistically” planned to take the company private at a bargain price, lawyers for the Southeastern Pennsylvania Transportation Authority said today in a complaint in Delaware Chancery Court in Wilmington. SEPTA accused the company’s directors of approving the deal without a reasonable independent process.

“In acting to protect the interests effectively of Volgenau’s ‘family’, the SRA board did not effectively ‘shop’ the company to see if a better alternative was available,” SEPTA said in its complaint.

SRA, based in Fairfax, Virginia, announced April 1 that Providence will pay $31.25 a share, a 10 percent premium to the company’s closing price on March 31. SRA, which helps government agencies in areas such as national security, disaster response planning and information systems, started looking for a buyer in October. Providence Equity last year hired Renato A. DiPentima, the former chief executive officer of SRA, as a senior adviser.

Under the agreement, SRA, founded in 1978, will continue to be led by its existing management team. Volgenau, owner of 21 percent of outstanding shares and 71 percent of voting rights, will continue as chairman, according to the complaint.

Closing Date

The deal is expected to close in the fiscal quarter beginning July 1. SRA said the company has 30 days to solicit other acquisition proposals.

Philadelphia-based SEPTA, the nation’s fifth-largest public transportation system by ridership, is seeking to represent all shareholders. It is seeking a court order barring the deal.

A SRA spokeswoman, Sheila S. Blackwell, didn’t immediately return a phone call seeking comment.

The case is Southeastern Pennsylvania Transportation Authority v. Volgenau, CA6354, Delaware Chancery Court (Wilmington).

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net; Sophia Pearson in Philadelphia at spearson3@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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