The Science Applications International Corporation said on Thursday that it planned to cleave itself into two publicly traded companies, becoming the latest in a string of corporate break-ups.
SAIC plans to spin off its government services business, separating it from the division that provides technology for the national security, health and engineering industries. The government services unit is expected to report $4 billion in revenue for the year ended Jan. 31, while the national security business is expected to report $7 billion in revenue for the same time period.
The move is meant to reduce potential conflicts of interest, particularly for the government services business, which will be free to pursue systems engineering and technical assistance and offerings to the intelligence sector.
“In this next step of our strategic plan we configure ourselves for the future,†John Jumper, the company's chairman and chief executive, said in a statement. “This affords both companies an excellent opportunity to combine optimized cost structures, unrestricted access to their respective markets, and the leveraging of decades of SAIC's scientific and engineering excellence to unleash the growth and value we can deliver to our customers, employees and shareholders.â€
A number of companies, from Sara Lee to Tyco, have pursued corporate break-ups as a way to unlock value. The rationale behind such moves is aimed at creating more focused companies that will generate better returns for shareholders.
SAIC is being advised by Citigroup on the plan.
