General Dynamics to buy healthcare IT firm

NEW YORK, USA: Defense contractor General Dynamics said on Tuesday it will expand in the growing market for healthcare information technology by acquiring Vangent Inc for about $960 million.

General Dynamics is to buy Vangent from private equity firm Veritas Capital in a cash deal that will add to its earnings in 2012.

Defense contractors are looking to acquire companies with product lines that are expected to be in high demand as U.S. spending on weapons comes under pressure.

Last month, General Dynamics bought a cloud computing service firm for an undisclosed sum, and in June it acquired a provider of secure wireless networking equipment

General Dynamics said in its statement that the acquisition of Vangent would help give it "the scope and scale to compete in markets that are receiving high priority in current funding and entitlement-reform initiatives."

Arlington, Virginia-based Vangent provides consulting, systems integration, human capital management and other outsourcing services to the U.S. federal and international governments.

It has more than 7,500 employees and generated $761 million in revenue in 2010.

In June, Reuters reported that Vangent had hired bankers to sell itself in a deal that could fetch roughly $1 billion.

Earlier this month, another healthcare IT provider, Emdeon Inc, said it agreed to be taken private for $3 billion by Blackstone.

Vangent will become part of General Dynamics Information Technology, which has been providing healthcare IT systems and solutions to federal, commercial and military customers.

The deal is expected to close October 1