Lockheed sells IMS division
- By Dan Caterinicchia, Dan Caterinicchia
- Jul 20, 2001
In a move that will combine information technology leaders in the state
and local government market, Lockheed Martin Corp. announced July 19 that
it has reached a definitive agreement to sell its wholly owned subsidiary
IMS Corp. to Affiliated Computer Services Inc.
Lockheed Martin IMS customers are located in 44 states and 250 offices
throughout the United States and Canada, and the company has about 4,800
employees. Its business areas include:
* Children and family services.
* Information resources management.
* Municipal services.
* Transportation systems and services.
* Welfare and workforce services.
ACS provides information technology and business process outsourcing
solutions to many government clients, including the governments of North
Carolina, Georgia, California, New York and Illinois, and the federal departments
of Defense, Education and Health and Human Services.
The Dallas-based company's services include business process outsourcing,
e-commerce, technology outsourcing and professional and systems integration
"What we pick up is additional market sectors and technology offerings
in the state and local sector," said Lesley Pool, corporate director of
marketing at ACS. "We're both significant players in different sectors of
state and local. Put us together, and what you gain is local presence and
knowledge. Our footprint is in all states doing all things."
Under the agreement, ACS will acquire all of the stock of IMS. The proposed
transaction of $825 million in cash is expected to close in the third quarter
of 2001. After transaction costs and associated state and federal tax payments,
the deal is expected to yield between $500 million and $550 million in cash
to Lockheed Martin. The transaction is subject to regulatory approvals and
satisfaction of other customary conditions.
John Brophy, IMS president and chief executive officer, said he's been talking to the company's government customers in anticipation of the sale and they have embraced it wholeheartedly. "Our customers are thrilled," he said. "This means more products, more depth and more scale" for them.
Within ACS, Brophy will continue to head to the state and local group. With the added revenue from IMS, ACS will become the "largest service provider in state and local government," he said.
Brophy said IMS has experienced a growth rate of about 30 percent over the past few years and therefore no layoffs or restructuring are planned. "We're going to grow," he said. "The state and local marketplace is immense, and we're moving smartly forward. ACS' business fits nicely into our portfolio."
Brophy said the sale of IMS was the last piece in Lockheed Martin's strategy to pay down its debt. He said he had spoken to the CEOs of both companies Thursday and both got "exactly what they wanted."
Lockheed Martin, based in Bethesda, Md., sold IMS to "focus more on
our core business units: systems integration, space, aeronautics and technology
services," said spokeswoman Meghan Mariman, adding that Lockheed's government
customers in those units will not be affected by this sale.
Both companies are involved in providing local governments with the
red-light cameras for traffic enforcement that have come under fire lately
on Capitol Hill. IMS also was in the news last week when it announced that
former Indianapolis Mayor Stephen Goldsmith, a Bush adviser on information
technology, had taken a job with the firm as a senior vice president.