Exelis to spin-off military and government services business

Exelis's (XLS) board authorizes a plan to spin-off its military and government services business, Exelis Mission Systems. Completion is expected in summer of 2014.

Exelis will focus future investments on strengthening its Critical Networks, ISR & Analytics, Electronic Warfare, and Aerostructures ops.

Exelis is expected to generate $3.4B in revenue in 2013 after a pro forma adjustment for the spin-off, with a "meaningful appreciation in its growth and operating margin profile" as well as diversification of non-U.S. defense customers to 50% from 30% currently.

Exelis Mission Systems' pro forma 2013 revenue is estimated at $1.5B. Division President Kennett Hunzeker will lead the spun-off entity.

Conference call at 8:30am ET tomorrow

Comments (3)
  • Robert Hennecke
    , contributor
    Comments (867) | Send Message
    Does this mean the issuance of shares to current XLS shareholers of this new entity or is this going to be a subsidiary of XLS and thus the same shares would cover both entities ?


    On the surface it seems to be a new share issuance to occur in 2014 but usually there is a shareholder vote on these things.
    12 Dec 2013, 01:14 AM Reply Like
  • SA Editor 2
    , contributor
    Comments (11) | Send Message
    Shares of the spin-off will be issued and separately traded. The PR title: "Exelis announces plan to spin off a new publicly traded military and government services company"
    12 Dec 2013, 10:24 AM Reply Like
  • Robert Hennecke
    , contributor
    Comments (867) | Send Message
    It's a definite buy. I listened to the conference call and it looks good. The only part that confuses me is the lack of a shareholder vote, precise dates for the spinoff and it having no income tax implications. At any rate it makes sense as Exelis is evolving into different branches that are becoming unwieldly. This will make a decision to invest more of a binary yes no whether you like this or that business segment. I'm also curious as to how many of the new units we will get and the likely value decrease of the parent Exelis. There is an element of confusion at least to me at this point.
    12 Dec 2013, 09:06 PM Reply Like
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