US aerospace and defence engineering firm Exelis has announced plans to spin off a new publicly traded military and government services company.
Currently called Exelis Mission Systems, the business is part of Exelis’ information and technical…
US aerospace and defence engineering firm Exelis has announced plans to spin off a new publicly traded military and government services company.
Currently called Exelis Mission Systems, the business is part of Exelis’ information and technical services segment. On completion, it will be renamed and rebranded as an independent company.
The transaction is intended to be tax-free to Exelis and its shareholders, is expected to be completed by the summer of 2014, and is subject to final approval of the company’s board of directors. A shareholder vote is not required.
Commenting on the plan, David Melcher, chief executive officer and president of Exelis said:  “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 able to more effectively meet the needs of their customers, both domestically and internationally.”
Following completion of the spin-off, Exelis will focus future investments on strengthening in four strategic areas: critical networks; ISRÂ & Analytics; electronic warfare; and aerostructures.
In addition, the company expects that revenues will become less reliant on the US defence market, which has been marked by budget uncertainty and shifting priorities.
Today, about 30% of Exelis revenues are from non-US defence markets, following the spin-off, these markets will account for 50% of its revenues.
Pro-forma for the spin-off, Exelis is expected to generate 2013 estimated revenues of approximately US$3.4bn with meaningful appreciation in its growth and operating margin profile.
Exelis is itself a spin off having been part of the ITT group until October 2011 when began trading separately on the New York Stock Exchange. Following its flotation, Exelis was the subject of takeover rumours with both Raytheon and BAE Systems linked to the business.
