Veritas Capital buying Lockheed EIG for $815 million

NEW YORK/WASHINGTON (BestGrowthStock) – Lockheed Martin Corp (LMT.N: ) has agreed to sell its Enterprise Integration Group unit to private equity firm Veritas Capital for $815 million.

Lockheed’s decision to sell EIG, which advises government agencies on military platforms, was prompted by a tightening of Pentagon rules aimed at removing potential organizational conflicts of interest caused when contractors advise the government on weapons systems for which they end up bidding.

New York-based Veritas Capital, focused on the defense and government services sector, has beat out several private equity firms, including Leonard Green & Partners’ Scitor, Carlyle’s (CYL.UL: ) Booz Allen and Kohlberg Kravis Roberts’ (KKR.UL: ) TASC, sources familiar with the transaction told Reuters.

Technical services company ManTech International (MANT.O: ) had also expressed interest in EIG early in the process, the sources said.

Lockheed is also in the advanced stage of selling another of its divisions, Pacific Architects and Engineers unit, which people familiar with the matter have said could fetch about $500 million and attracted interest from engineering and construction companies as well as buyout firms.

EIG, which has about 1,800 employees, generated revenue of $626 million for the 12 months that ended June 30.

JPMorgan Chase (JPM.N: ) and Stone Key Partners advised Lockheed on the EIG sale.

Lockheed does not break down results for EIG, but sources told Reuters previously that the unit had annual earnings of $65 million before interest, taxes, depreciation and amortization.

The sale price of $815 million would represent 12.5 times the division’s EBITDA.

Lockheed has forecast 15 percent to 20 percent annual growth in EIG’s EBITDA and has told potential bidders of a $150 million backlog likely to be awarded in the near future, the sources said.

(Reporting by Soyoung Kim and Andrea Shalal-Esa; Editing by Lisa Von Ahn and Maureen Bavdek)

Veritas Capital buying Lockheed EIG for $815 million