By Robert Wall
LONDON--BAE Systems PLC (BA.LN) said on Friday it is considering
exiting some of its U.S.-based information technology activities
after having been approached by others about taking over the
assets.
The U.S. manpower and services IT business, principally part of
the intelligence and security arm of Europe's largest defense
company, has "generated external interest and a number of
enquiries," the London-based company said in a statement.
European and U.S. defense companies have been revamping their
portfolios to adjust to changes in defense spending priorities
around the globe. U.S. tank maker General Dynamics Corp. (GD) is in
talks to sell a cybersecurity business to private-equity firm
Marlin Management Co., while Airbus Group NV (AIR.FR) and Italy's
Finmeccanica SpA (FNC.MI) also are considering shedding defense
assets.
BAE Systems, which last year announced it would exit land system
activities in South Africa and has undertaken a series of disposals
in recent years, said in its annual report that the U.S.
intelligence and security market "continued to experience
challenges" in part owing to spending uncertainty.
The company has hired Morgan Stanley and advisory firm Stone Key
Partners LLC to support the review of the businesses that have
about 9,000 employees and generated a little over GBP1 billion
($1.5 billion) in combined sales last year, said a person familiar
with the matter. The operations, which include some in the U.S.
Platform & Services segment, are spread throughout various BAE
Systems and U.S. government sites in the U.S.
The operations largely do work for the U.S. government in areas
such as information technology support. Investors welcomed the
news, causing BAE Systems shares to rise more than 3% in London
trading.
"There can be no certainty that any transaction will occur," BAE
Systems said.
The review doesn't include technology or product-focused
activities within the intelligence and security unit that does a
lot of work for U.S. intelligence agencies, BAE said. Its cyber
business, BAE Systems Applied Intelligence, also isn't part of the
review.
BAE Systems has been deepening its focus on intelligence support
and cyber security. Last year it acquired Signal Innovations Group,
which provides imaging technology for U.S. intelligence agencies,
and SilverSky, a cloud-based information protection business.
Several Western defense companies are boosting their cyber
security activities in the hope demand from commercial customers
may deliver growth that can outpace military spending. Raytheon Co.
(RTN) this week said it would invest $1.6 billion to expand its
cyber operations.
Write to Robert Wall at robert.wall@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires