Qinetiq lines up interest in sale of US tech unit

Michael Bow
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QINETIQ, the FTSE 250 listed defence firm, is considering plans to carve out its US unit amid an ongoing review into how to cash in on the flagging division.

The former government-owned company, which was floated on the stock market in 2006, is understood to have slapped a for sale sign on its US Services division after a five month review into maximising returns on the business.

The launch of a sell-off, first reported by the Sunday Times, follows an announcement in May that the company was undertaking a strategic review into the division, which offers engineering services to NASA as well as technology to protect against cyber attacks.

Qinetiq declined to comment on whether it had launched a sale process but said in a statement: “We are working with a number of advisers to understand the options for maximising the value of US Services.”

The US division, which contributed about a third of Qinetiq’s £1.3bn revenues last year, has been under pressure recently after a cut in federal spending by the American government on some defence projects.

Last year it posted profits of £21.9m, down from £32.1m in 2011.

The division is in a difficult position as a standalone to win new business given it is too large to compete as a small and medium sized enterprise, but too small to go head-to-head with mega-defence firms for larger contracts.

Chief executive Leo Quinn, who was previously chief executive of banknote producer De La Rue, previously said in May he was “not ruling out options” on the future of US services.

The division sells most of its services to the financial sectors, which represents about 40 per cent of customers.