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Lockheed Martin’s Robert Stevens Discusses Divestiture Plans

Lockheed Martin Corporation (NYSE: LMT) announced its plans yesterday to divest most of the Enterprise Integration Group (EIG) and Pacific Architects and Engineers, Inc. (PAE).

“EIG and PAE are both solid businesses with good growth prospects, but their growth and ultimate long-term value are currently being constrained by their affiliation with Lockheed Martin,” Chairman & CEO Robert J. Stevens said.

The plans come after a review carried out by Lockheed Martin to reshape the company’s portfolio and ensure high end performance for the company over the long term.

“We periodically review our portfolio of capabilities and services against the demands of the environment to find ways to continuously provide the best, most affordable solutions for our customers, a secure future for our employees and value for our shareholders by assuring a sound strategic fit for each of our lines of business,” Stevens said. “We completed such a review recently, factoring in the major changes we’ve seen in the global security environment, world economic conditions and the new priorities of the Administration. As a result, we are initiating several portfolio-shaping actions to strengthen our business over the long term.”

Part of the reason for the divestiture of EIG were some concerns raised by federal government clients regarding perceived OCI issues, according to President and Chief Operating Officer Christopher E. Kubasik.

“Through EIG, Lockheed Martin provides both systems and services to a broad range of government customers, and this has led to concerns about the potential for conflicting interests,” Kubasik said.

Regard PAE, Kubasik said, “In the current market, customers are seeking a different mix of services that do not fit with our strategy.” Therefore, the decision was made to divest PAE.

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