Exelis [XLS] yesterday said it will spin off its $1.5 billion military and government services business next summer to better focus on its C4ISR and remaining services business while also expanding its international defense work as a percentage of sales.
The spin off of Exelis Mission Systems will create a new publicly traded company that is currently part of the Information and Technical Services segment.
Exelis said the spin-off would be tax free and that it expects to continue its current quarterly dividend.
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| Exelis Mission Systems President Kenneth Hunzeker. Photo: Exelis |
“We are repositioning our businesses to enhance our focus on the long-term growth drivers that will enable us to remain well positioned in an evolving global market environment,” David Melcher, president and CEO of Exelis, said in a statement. “Today’s announcement follows a comprehensive review of our business and market dynamics. This spin-off enables both Exelis and Mission Systems to become more agile, better aligned and more effectively meet the needs of their customers, both domestically and internationally.”
Exelis estimates that based on its projected 2013 revenues it will be a $3.4 billion company without Mission Systems. The company plans to host an investor call this morning to discuss the spin-off and its plans.
Exelis said that once the spin-off is complete, non-U.S. defense markets will account for about half of its sales, up from 30 percent today.
Without Mission Systems, Exelis will be focused on four strategic growth areas: Critical Networks, ISR and Analytics; Electronic Warfare; and Aerostructures.
Exelis Mission Systems has nearly 7,000 employees and operates in more than 100 locations in 18 countries. Its work includes facilities management, full spectrum logistics support, operations and maintenance of networks and communication infrastructure, and more.
Once the spin-off is complete, the new Mission Systems company will be led by Kenneth Hunzeker, who has been president and general manager of the business since 2011.
The spin-off will not require a shareholder vote but is subject to final approval by the board of directors.