Montco-based Unisys to sell its U.S. Federal business for $1.2 billion
Local employees are not expected to be ‘materially affected’
WHITPAIN TOWNSHIP » Unisys Corp., announced Thursday it has agreed to sell the company’s U.S. Federal business to Science Applications International Corp. (SAIC).
Unisys Federal is an operating unit of Whitpain Townshipbased Unisys, and is a provider of infrastructure modernization, cloud migration, managed services, and enterprise IT-as-a-service through scalable and repeatable solutions to U.S. federal civilian agencies and the Department of Defense.
Science Applications International Corp. is a technology integrator based in Reston, Va.
The all-cash transaction — valued at $1.2 billion — is expected to close in the first half of this year, following customary closing conditions including completion of U.S. antitrust review, according to a Unisys spokesman.
The agreement has been unanimously approved by the boards of directors at both Unisys and Science Applications International Corp. The businesses will continue to operate independently until the transaction closes.
Net proceeds from the sale are expected to be used to pay down debt and reduce pension obligations, “significantly improving Unisys’ balance sheet, its U.S. pension funded status and overall financial flexibility,” according to the company.
“This transaction comes at a significant premium to the Unisys trading multiple, and is a tribute to the unique and attractive business that our U.S. Federal colleagues have built over many years,” Peter Altabef, chairman and CEO of Unisys, said in a statement. He added that Unisys has become known as an innovator in the federal market. “This transaction will allow us to significantly enhance our balance sheet, which will create increased operational flexibility that will ultimately position us to better serve our clients while delivering increased value to investors.”
Unisys’ U.S. Federal business represents more than 1,900 associates, with approximately $689 million in revenue for the 12-month period that ended Sept. 30, 2019.
Unisys operates internationally and in 11 states, with its corporate headquarters located at 801 Lakeview Drive in Whitpain Township, Montgomery County.
In Pennsylvania, the company has 500 employees, including 375 at the Whitpain location, according to Tony Buglione, a spokesman for Unisys. He said the company recently consolidated its Montgomery and Chester County locations, moving employees from Malvern offices into its “newly redesigned” Whitpain facility.
“Our Blue Bell associates primarily support our corporate functions or our Enterprise Solutions business which are not a part of this transaction. As a result, we do not expect the local workforce to be materially affected,” he said Thursday.
Buglione added that Unysis’ Federal associates, along with select associates dedicated to Federal from other Unisys organizations that will be moving to Science Applications International Corp., will benefit from increased opportunities associated with being part of a company with a larger U.S. Federal footprint. In addition, he added that Unisys associates remaining with the company will benefit from increased growth opportunities due to improved operational flexibility and a “stronger and more financially stable Unisys.”
“While we aim to minimize the impact to our remaining associates, we do anticipate there may be some organizational realignment and/or restructuring to right size and realign our organization to our new cost structure in 2020,” he added.
According to information provided by Science Applications International Corp., the acquisition of Unisys provides several strategic and financial benefits for the company.
“With the addition of Unisys Federal, SAIC will be a leading provider of digital transformation services and solutions to the federal government. This exciting opportunity advances our strategy by building on our modernization capabilities, increasing customer access, accelerating growth and enhancing shareholder value,” Nazzic Keene, SAIC CEO, said in a statement. “The financial benefits of acquiring Unisys Federal are compelling, including accretion of adjusted EBITDA margins, non-GAAP earnings per share, and cash generation.”
Science Applications International Corp. expects to fund the $1.2 billion cash transaction through a combination of cash on hand and incremental debt.