Opinion ID: 2273298
Heading Depth: 1
Heading Rank: 4

Heading: The Carlyle Transaction

Text: In February 2007, Booz Allen reorganized its two principal lines of business into two separate business units: (i) a government unit, which provided consulting services to governments and governmental agencies, and (ii) a global commercial unit, which provided services to commercial and international businesses. At that time, Booz Allen's leadership began to consider spinning off one of those two businesses. During the summer of 2007, Booz Allen's leadership discussed internally a possible transaction in which Booz Allen would sell its government business. In October 2007, Booz Allen and The Carlyle Group began negotiations, which culminated in The Carlyle Group's November 2007 offer to purchase Booz Allen's government business for $2.54 billion. On January 16, 2008, the Wall Street Journal reported that Booz Allen was engaged in discussions to sell its government-consulting business to private-equity firm Carlyle Group, and that the sale price will likely be around $2 billion. They reported that the transaction was expected to close by March 31, 2008. At some point before March 31, 2008, however, Booz Allen's board and management learned that the Carlyle transaction would close later than planned. In March 2008, Booz Allen's board of directors, in anticipation of the Carlyle transaction, extended their (and management's) terms of office by 90 days, until the end of June 2008, and declined to issue new stock rights to its officers, thus preserving the contemporaneous Booz Allen stock ownership. Booz Allen's commercial business stockholders also elected the persons who would become the board of directors of a newly formed entity  Booz & Company, Inc.  that would operate Booz Allen's commercial business after the Carlyle transaction closed. [3] By this point, the purchase price of the Carlyle transaction had been agreed upon, and the Booz Allen board and stockholders knew that the transaction would generate over $700 per share to Booz Allen's stockholders. On May 15, 2008, Booz Allen entered into (i) a formal merger agreement that would result in the sale of its government business to The Carlyle Group, [4] and (ii) a spin-off agreement that would result in the transfer of its commercial business to Booz & Company, Inc. On May 16, 2008, Booz Allen publicly announced the sale of its government business to The Carlyle Group for $2.54 billion. That transaction closed on July 31, 2008four months after the plaintiffs' put rights expired. [5]