Lockheed finalizes $815M sale of EIG division

Divestiture to Veritas Capital prompted by concerns about organizational conflicts of interest

Lockheed Martin Corp. has completed the divestiture of its Enterprise Integration Group business to Veritas Capital for $815 million in cash.

The defense contractor started EIG at the behest of the federal government and now, 42 years later, the company is selling it, also at the government’s behest.

The divestiture was based on the government’s increased concerns about perceived organizational conflicts of interest, the company said last week, citing its original announcement of June 2.

Selling the business will eliminate that perception and benefit customers, shareholders, and employees, the statement said.

“The decision to divest EIG followed a comprehensive review of our portfolio to find ways to continuously provide the best, most affordable solutions for our customers, a secure future for our employees, and value for our shareholders,” said Lockheed Martin Chairman and CEO Robert Stevens, announcing the sale to Veritas on Oct. 13.

“EIG and its employees continuously demonstrate tremendous capability and serve the nation with dedication, diligence and honor. I am confident that the company and its employees will continue to thrive under the management of Veritas,” Stevens said.

EIG provides system engineering services, architecture, and integration services and support to a broad range of government customers.

If the group had remained part of Lockheed Martin, it would have faced severe restrictions on which contracts it could bid on and its business would shrink. So selling it allows the unit to continue to pursue new business and grow, Linda Gooden, executive vice president of Lockheed Martin’s Information Systems and Global Solutions group, told Washington Technology when EIG was put up for sale.

The EIG unit, which was part of Gooden's group, always was cordoned off from the rest of the company so it could help customers develop the requirements for projects and contracts that would then be pursued by the greater Lockheed Martin as well as its competitors.

“We never had a firewall breach,” Gooden said.

The sales of EIG and another Lockheed Martin unit, Pacific Architects and Engineers, are part of an initiative to keep Lockheed Martin focused on core competencies over the long term, she said.

They represented about 3 percent of Lockheed Martin’s overall revenue, or $1.3 billion, based on 2009 revenue of $45.2 billion. 

Lockheed Martin Corp., of Bethesda, Md., ranks No. 1 on Washington Technology’s 2010 Top 100 list of the largest federal government contractors.

About the Author

David Hubler is the former print managing editor for GCN and senior editor for Washington Technology. He is freelance writer living in Annandale, Va.

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