CGI Group, the listed, Canadian IT and business services firm, will acquire its competitor Stanley Inc., which provides tech solutions across a number of government agencies in a $904 million deal.

CGI is not raising any new debt as part of the deal; it will fund the acquisition with existing credit facilities and cash on hand. The $37.50 per share offer from CGI to Stanley, based in Virginia, represents a premium of 23.3% over Stanley’s 30-day volume weighted average stock price and 38.3% over its 60-day average. It is expected the deal will be completed by the end of September.

Michael Roach
, president and chief executive of CGI, said the deal represents the company’s commitment to continue expansion in the US federal market.

Stanley will be absorbed into CGI Federal. The deal will result in a company with combined total revenues of $4.5 billion and more than 30,000 employees.

Deutsche Bank and TD Securities were financial advisors to CGI. Holland & Knight, Kaye Scholer and Fasken Martineau DuMoulin, advised CGI. Sagent Advisors Inc. was financial advisor to Stanley in connection with the transaction. Stanley has been represented by Cravath, Swaine & Moore and Covington & Burling.

Strategic deals have dominated 2010’s M&A market; recent examples of consolidation between competitors include the ongoing battle between Hertz and Avis Budget to buy Dollar Thrifty, the Continental-United deal and Alorica Inc.’s deal to buy Ryla Inc., a business processes outsourcer, earlier this week.

The business services space, however, has also been targeted by private equity seeking to capitalize on streamlining processes and implementing better technology. ManTech International, for example, is waiting with up to $1 billion in buying power to make acquisitions. Other recent PE buyers in the space include Oak Hill Capital Partners and GTCR.