Wednesday, June 12, 2013 12:51:08 PM
By Dan Primack June 12, 2013: 10:30 AM ET
Carlyle has made lots of money on Booz Allen, but the NSA scandal could tamp down future returns.
FORTUNE -- The Carlyle Group has gotten all sorts of unwanted attention this week, as majority shareholder of defense contractor Booz Allen Hamilton (BAH), where NSA leaker Edward Snowden worked before hopping a flight to Hong Kong.
For the uninitiated, Carlyle (CG) bought a majority stake in the company's government services business for around $2.5 billion in 2008 – via a complex transaction in which Booz Allen's commercial business was spun off into an independent entity now known as Booz & Co. Carlyle then took Booz Allen Hamilton public in 2010 at $17 per share.
Since then the stock has experienced a number of peaks and valleys, although it's never actually topped $20 per share. It was at $18.65 a couple of weeks ago, but is trading at just $16.65 per share as of this writing (including more than a 4% drop since Snowden identified himself).
At issue isn't so much Booz Allen's specific connection to Snowden, but rather that this episode could cause the government to reduce its epic reliance on outside contractors for intelligence work.
This is where things could get a bit dicey for Carlyle. The firm already has made back well more than its original $956 million equity investment via dividend recaps (it also provided some mezzanine capital), but it never sold any of its 98 million or so shares. Not in the IPO, nor in the intervening 31 months.
The firm's 70% position currently is valued at around $1.64 billion, or $120 million lower than it was at market close last Friday. And if the company actually does face a major loss of business, then the value would only go down from here.
Obviously that's all hypothetical and predicated on long-term behavioral changes caused by an event that's still less than a week old. But, if it comes true, then Carlyle may have wished it had already begun selling down a bit…
Recent BAH News
- Booz Allen Hamilton to Host Conference Call to Discuss Second Quarter Fiscal 2025 Results on Friday, October 25, 2024 • Business Wire • 09/13/2024 12:00:00 PM
- Booz Allen Awarded $421M CDM DEFEND Contract • Business Wire • 08/29/2024 12:00:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 08/13/2024 09:22:26 PM
- Booz Allen to Bring Best in Class Tech Solutions to FBI • Business Wire • 08/08/2024 12:00:00 PM
- Booz Allen Hamilton Secures $506 Million Contract to Drive Innovation for U.S. Army Aviation • Business Wire • 08/06/2024 12:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:51:01 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:50:49 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:50:40 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:50:28 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:50:17 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:50:07 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 08/05/2024 08:49:14 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 08/01/2024 03:05:20 PM
- Booz Allen Deploys the Power of Generative AI in Space • Business Wire • 08/01/2024 12:31:00 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 07/30/2024 08:12:03 PM
- Form 10-Q - Quarterly report [Sections 13 or 15(d)] • Edgar (US Regulatory) • 07/26/2024 10:49:07 AM
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