Defense giant Exelis Inc. announced plans Wednesday to spin off Colorado Springs-based Exelis Mission Systems into a separate public company by next summer so it can focus on higher-growth markets.
The new company would employ 300 locally and about 7,000 in more than 18 countries to generate an estimated $1.5 billion in annual revenue, which would immediately make it the largest of four public companies based in Colorado Springs.
The move could result in more hiring locally by the new company, since it "will require Mission Systems to take on all the functions that publicly-traded companies contain," George Rhynedance, vice president and communications director for Mission Systems, said in an e-mail message.
"This could potentially require additional manpower, but those decisions will be made as we develop the spin plans more thoroughly," he said.
Exelis CEO David Melcher said in a press release that Exelis directors unanimously approved the spinoff plan.
"This spin-off enables both Exelis and Mission Systems to become more agile, better aligned and able to more effectively meet the needs of their customers, both domestically and internationally," Melcher said. "We are repositioning our business to enhance our focus on the long-term growth drivers that will enable us to remain well-positioned in an evolving global market environment."
Mission Systems specializes in facilities management, logistics and network communications services, primarily to the U.S. government, and has "historically generated strong cash flow and demonstrated a high return on invested capital due to the low capital investment required in the services market," Exelis said in the release.
The new company will get a new name, and will be headed by Kenneth Hunzeker, a retired Army lieutenant general who has been president and general manger of Mission Systems since April 2011.
The rest of Exelis, which will continue to employ 700 in Colorado Springs, will focus on intelligence, surveillance and reconnaissance systems, integrated electronic warfare systems, networked communications systems, engineering, professional services and manufacturing commercial and military aircraft parts, generating annual revenue of about $3.4 billion.
Exelis said in the release that the spinoff of Mission Systems would reduce its reliance on U.S. military contracts from 70 percent to 50 percent.
Under the spinoff, Exelis shareholders will receive all shares in the new company, which would get a new name.
Virginia-based Exelis was formed two years ago when it was spun off from the New York-based industrial equipment manufacturer ITT Corp.
Based on revenue, Mission Systems will be more than triple the combined size of the three other public companies based in the Springs: Casino operator Century Casinos Inc., Mexican gold mine operator Gold Resource Corp. and medical laser manufacturer Spectranetics Corp.
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