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, 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 said it had hired external advisers to undertake a
review of the business that has about 9,000 employees and generated
about $800 million in sales last year. The operations, which are
part of the $1.7 billion cyber and intelligence arm, 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
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