Leo Quinn, QinetiQ Group CEO / QinetiQ
LONDON — QinetiQ has agreed to sell its US services division to the SI Organisation in a deal that could net the British defense technology company up to US $215 million.
The future of the loss-making services division has been under review since last May after a double-digit sales slump in the increasingly tough US market raised questions about the future of the operation under the QinetiQ banner.
The proposed deal with the privately held US defense company involves an initial cash consideration of $165 million plus a potential further payment of $50 million related to profit targets being met.
“Our strategic review concluded that the sale of the US Services division represents the best route to maximise value for shareholders from these assets while retaining a significant footprint in North America for The Group through our Global Products Division and Cyveillance business,” Leo Quinn, the company CEO said in a statement.
The sale excludes QinetiQ North America’s Cyveillance cyber security business that it acquired in 2009.
QinetiQ’s US Services business reported 2013 revenues of £475 million (US $797.2 million) compared with £534 million the previous year.
The business, which supports defense, security, intelligence and other US federal agencies in several market sectors, includes training and simulation, mission assurance, and software and systems integration.
QinetiQ said the business lacked scale and synergies and the sale created a stronger, more focused company.