SAIC [SAI] yesterday said its board of directors has approved the long-planned spinoff of its technical, engineering and enterprise information technology services business after the market close on Sept. 27, just over a year after the company announced plans to split into two separate publicly traded companies.
The roughly $4 billion services business, which will retain the SAIC name, will trade on the New York Stock Exchange under the stock ticker symbol “SAIC.” The $7 billion national security, health and engineering solutions business will be called Leidos Holdings, Inc., and trade on the NYSE under the stock ticker symbol “LDOS.”
SAIC said that it will incur about $500 million in debt financing in connection with the spinoff, with $295 million to be used to pay a cash dividend to the new SAIC immediately after completion of the deal. It said that SAIC will use the dividend proceeds for general corporate purposes.
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| Future SAIC CEO Tony Moraco. Photo: SAIC |
Under terms of the spinoff, each current SAIC stockholder of record as of the close of business on Sept. 19 will receive one share of common stock in the new SAIC for every seven shares they currently hold. The board of directors also approved a one-for-four reverse stock split of Leidos shares.
SAIC’s current chairman and CEO, John Jumper, will become the chairman and CEO of Leidos. Stu Shea, SAIC’s chief operating officer (COO), will become president and COO of Leidos.
Tony Moraco, currently president of SAIC’s Government Solutions Group, will become CEO of the new SAIC.
“As a leading technology integrator, the new SAIC will be a more streamlined organization with great focus on service our customer’s critical mission and enterprise IT needs,” Moraco said in a statement. “The spin allows us to eliminate any perception of organizational conflicts of interest, enabling us to pursue a new world of market opportunities with an integrated enterprise approach.”
The two companies will host a joint investor day on Sept. 11 in New York City to discuss the pending spin-off and the way forward for each firm.