Global aerospace and defense contractor General Dynamics has entered into an agreement to acquire CSRA, a leading IT business that reported $5 billion in revenue for Fiscal Year 2017.

General Dynamics said that it will pay $40.75 per CSRA share. That’s a 32 percent premium to its Friday closing price of $30.82. The deal includes an additional $2.8 billion in debt.

Shares of CSRA Inc., soared almost 32 percent at the opening bell Monday.

“The acquisition of CSRA represents a significant strategic step in expanding the capabilities and customer base of GDIT,” said Phebe Novakovic, chairman and chief executive officer of General Dynamics, in the release. “CSRA’s management team has created an outstanding provider of innovative, next-generation IT solutions with industry-leading margins. We see substantial opportunities to provide cost-effective IT solutions and services to the Department of Defense, the intelligence community and federal civilian agencies. The combination enables GDIT to grow revenue and profits at an accelerated rate. It will allow us to deliver even more innovative, leading-edge solutions to our customers.”

Larry Prior, CSRA’s chief executive officer and president, said in the release that the deal represented an “excellent outcome” for his company’s employees, customers and stockholders.

“It builds on strong shared values, culture and a passion for serving our customers’ missions,” he said. “We believe that this combination creates a clear, differentiated leader in the Federal IT sector, with a full spectrum of enterprise IT capabilities, including unique depth in Next-Gen offerings in conjunction with our commercial IT alliance partners.”

The Boards of Directors of both companies unanimously approved the deal, which will see a subsidiary of GDIT begin a cash tender offer to acquire all outstanding shares of CSRA common stock at $40.75 per share. Once the tender offer is completed, GDIT will then acquire at the same price all remaining shares not tendered via a merger. The acquisition is expected to be completed in the first half of 2018.

President Donald Trump signed a budget bill on Friday that provides $700 billion for the Pentagon, giving it $94 billion more this budget year to spend on troops, training, ships and other hardware. It’s the biggest year-over-year windfall since the budget soared by 26.6 percent in 2003, when the nation was fighting in Afghanistan, invading Iraq and expanding national defense after the 9/11 attacks.

Next year, the figure is expected to jump to $716 billion.

The defense sector has made huge gains over the past year under the new administration with a number of friction points rising globally.

The Standard & Poors 500’s index that traces aerospace and defense stocks has risen almost four times as fast as the S&P 500 over the past 12 months.

CSRA and General Dynamics Corp. are based in Falls Church, Virginia.

The Associated Press contributed to this story.

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