Exelis to spin off government services business

December 11, 2013

McLean-based defense contractor Exelis said Wednesday its board has approved a plan to spin off its military and government services business into an independent public company by summer.

The move marks just the latest effort by contractors to reshape and reposition in response to shrinking government spending. Exelis itself was spun off from parent company ITT in 2011. More recently, McLean-based Science Applications International Corp. split into two public companies, promising each would be more competitive on its own.

In the announcement, David F. Melcher, Exelis’s chief executive, said the decision follows a comprehensive review of the company and the market. He said the spin-off would allow both companies to be more agile and better meet their customers’ needs.

Following the spin-off, Exelis said its work will be focused on critical networks; intelligence, surveillance, reconnaissance and analytics; electronic warfare; and aerostructures.

The unit to be spun off, known now as Exelis Mission Systems, will be renamed and rebranded. The business has close to 7,000 employees in 18 countries, and the future company is expected to have about $1.5 billion in 2013 revenue.

The new company will be led by Kenneth W. Hunzeker, a retired three-star general who has served as president of Exelis Mission Systems since 2011. He also previously headed government relations for ITT Defense and Information Systems.

Louis J. Giuliano, a former chief executive of ITT who is now an executive at the Carlyle Group , will be non-executive chairman of the new company’s board.

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