M&A

Leidos closes sale of commercial cyber business

Leidos has closed the sale of its now-former commercial cybersecurity business to Capgemini in order to gain more focus on the government market and highly-regulated industries.

Capgemini will add almost 500 staffers as part of the transaction, the company said Thursday. Terms of the transaction remain undisclosed, but the Washington Business Journal reported in February 2017 that the business generated around $100 million in annual sales at the time.

First announced in June of last year, the deal was subject to review by the Committee on Foreign Investments in the United States given Capgemini is headquartered in Paris.

The deal was anticipated to close late last year but CFIUS was closed during the five-week partial government shutdown. That held up final approval of the transaction, Leidos Chief Financial Officer Jim Reagan said Tuesday during an earnings call.

In this divestiture, Leidos becomes the latest government contractor to shed a commercial cyber business after trying to crack that market. Contractors have largely found commercial cyber to be a much more fragmented arena with a different pace and cadence then that in the government market.

“There are so many services and products that are flooding customers and CIOs in the commercial space,” Leidos Civil Group President Angela Heise told WT last year. “You have to maintain a really strong sales force that has the relationships with the CIOs and you have to constantly be evolving to react to all the new entrants to that space.”

Lockheed Martin was in the process of developing its own commercial cyber business at the time of its 2014 acquisition of Industrial Defender. Both entities merged together under Lockheed’s former IT services business, which then merged into Leidos in 2016.

Raytheon remains the lone large, blue chip government contractor involved in commercial cyber through the Forcepoint joint venture they hold a majority ownership of.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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