Carlyle Group to acquire Booz Allen

Carlyle Group, the private-equity firm run by David Rubenstein, agreed to acquire Booz Allen Hamilton Inc.'s U.S. government-consulting business for $2.54 billion, its biggest buyout since the credit markets collapsed in July.

Booz Allen, based in McLean, Va., will split off its corporate-consulting unit into a separate company, Carlyle said Friday in a statement. Booz Allen Chief Executive Officer Ralph Shrader will run the Carlyle-owned entity focused on government clients. Carlyle and Booz Allen had been in talks since at least January.

The Booz Allen government-consulting unit has more than 18,000 employees and annual sales of more than $2.7 billion. Its clients include branches of the U.S. military, the Department of Homeland Security and the World Bank.

Carlyle, based in Washington, manages $81.1 billion in assets. Rubenstein founded the firm in 1987 with William Conway and Daniel D'Aniello. The trio initially focused on deals tied to government and defense.

Carlyle and closely held Booz Allen have attracted high- level officials from the government. Carlyle's senior advisers have included former President George H.W. Bush, former British Prime Minister John Major, and Arthur Levitt, the ex-chairman of the U.S. Securities and Exchange Commission.

R. James Woolsey, who led the U.S. Central Intelligence Agency from 1993 to 1995, is a Booz Allen executive. Mike McConnell, the U.S. director of national intelligence, is a former senior vice president with the company.

Carlyle last year sold a minority interest in itself to Mubadala Development Co., an investment fund affiliated with the government of Abu Dhabi, capital of the United Arab Emirates.