Major government contractor Science Applications International Corp is buying out competing tech services firm Engility Holdings in a deal worth nearly $2.5 billion, the companies announced Sept. 10.

Reston, Virginia-based SAIC will acquire Chantilly, Virginia-based Engility for $1.5 billion in stock, and will assume roughly $900 million of Engility’s debt. The deal is expected to close by the fiscal quarter ending Feb. 1, 2019, according to the announcement.

SAIC has a market valuation of $3.8 billion and will be the second-largest government services contractor, behind Leidos. It will comprise more than 23,000 employees.

“The highly complementary portfolios, combined with our similar cultures, operating models and histories, make this transaction a compelling combination that enhances the value proposition for our customers, employees and shareholders,” SAIC CEO Tony Moraco said in a released statement.

The merger is just the latest of several in the market, including the April $9.7 billion deal buyout by General Dynamics Information Technology of CSRA Inc, itself a combination of former competitors Computer Sciences Corporation’s North American public sector business and SRA International. Last year, CSC merged another sector of its business with Hewlett Packard’s Enterprise Services arm (formerly EDS) to form DXC Technologies. In June DXC spun off its U.S. public sector services and merged that with Vencore Holdings and KeyPoint Government Solutions to create Perspecta Inc.

Engility in 2014 acquired Chantilly-based, privately held defense contractor TASC in a deal worth just over $1 billion.

Engility shareholders will receive $40.44 in SAIC stock for each of their shares, an 11.5 percent premium to Engility’s closing price of $36.24 on Sept. 7, according to the announcement.

Reuters reported in July that Engility was in talks with SAIC as well as CACI International regarding a potential sale.

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