Lockheed Martin Delays Decision On Spinoff Or Sale Of IT Business

In July, as Lockheed Martin(LMT) announced its acquisition of Sikorsky helicopter from United Technologies(UTX), it also announced it was considering a sale or spinoff of its IT business.  A decision had been expected by year end. Last week, the company said that although it was still very likely to divest the division, the decision would be pushed into next year amidst significant interest from buyers. This probably means that a sale is more likely than a spinoff, though a reverse Morris Trust could remain a possibility.

A sale or spinoff decision had been expected by the end of the month, but Chief Financial Officer Bruce Tanner said the high level of interest from potential buyers would push any move to next year.

Lockheed has been the largest supplier of IT services to the U.S. government for two decades. It started reviewing the business last year because of stiff competition and sluggish growth prospects.

Rivals including BAE Systems PLC and L-3 Communications Holdings Inc. made similar moves, though BAE in November said it would retain its U.S. government services business, which has annual sales of around $1.7 billion. L-3 still plans to press ahead with a sale or spinoff of its operation, which is focused on supplying intelligence agencies.

Mr. Tanner said at an investor conference that Lockheed was unlikely to change its mind and opt to retain its IT operation, which analysts have valued at around $4 billion.

Disclosure: The author holds no position in any stock mentioned