British defence group QinetiQ is set to sell its US Services division for $215 million and return up to £150 million to shareholders through a new share buyback.
QinetiQ, which has suffered a series of disappointing trading updates as US military spending has dwindled, said the deal would also enable it to save £12 million in financing costs by retiring its final £150 million of private debt.
Chief executive Leo Quinn said: “Our strategic review concluded that the sale of the US Services division represents the best route to maximise value for our shareholders from these assets, while retaining a significant footprint in North America for the group through our Global Products division and Cyveillance business.”
With revenues of £464 million last year, QinetiQ said the division was not large enough to compete with much larger players in a tough market. It also said that, as a British-owned business, it had to go through more administrative hoops to win US government business. The buyer, SI Organisation, being American, faces no such problems.
QinetiQ shares dipped 1.7p to 219p - 19p above their 2006 float price.