March 20, 2018 / 1:58 PM / 4 months ago

UPDATE 2-General Dynamics raises offer for sector peer CSRA

* GD's revised offer $6.9 bln, up from $6.8 bln

* Offer represents $41.25 per share in cash, up from $40.75

* GD's and CSRA's shares rise more than 1 pct (Adds background, analyst comment, share price)

March 20 (Reuters) - U.S. defense contractor General Dynamics on Tuesday raised its offer for sector peer CSRA Inc to $9.7 billion, including $2.8 billion in debt, in an attempt to top an unsolicited bid from CACI International Inc .

General Dynamics' revised offer under a merger agreement with CSRA's board represents an equity value of $6.9 billion or $41.25 per share in cash, compared with the prior $6.8 billion or $40.75 per share.

The revised bid from General Dyanmics for CSRA, a provider of information technology and related services to the U.S. defense department, is just shy of CACI's $41.79 per share cash-and-stock offer, based on CACI's closing price on Monday.

Given the all-cash nature of General Dynamics's offer, it has considerably less risk and may prevail over CACI's bid, analysts have said.

"We still think the likelihood of General Dynamics and CSRA deal remains high," CFRA Research analyst David Holt wrote in a note.

Shares of CSRA were up 1 percent at $41.44, while that of General Dynamic rose 1.3 percent to $226.90.

On Sunday, CACI, which sells information services to national security agencies, offered to buy CSRA for $44 per share, consisting of $15 per share in cash and 0.184 CACI shares for each CSRA share.

CACI's stock fell 7.5 percent on Monday, lowering the offer's overall price. The company's shares were up 3 percent at $150.05 in afternoon trading on Tuesday.

While CACI has been trying to scale up through deals, General Dynamics expects the deal with CSRA to help grab more of the revised defense budget.

Federal information technology and services spending, down sharply over the past few years due to cuts in defense budget, is expected to pick up again as President Donald Trump seeks to bolster military spending.

CACI said it was reviewing General Dynamics' revised offer, while CSRA was not immediately available for comment.

Reporting by Sanjana Shivdas and Ankit Ajmera in Bengaluru; editing by Patrick Graham and Arun Koyyur

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