Northrop Sells Federal IT Business to PE-Backed Firm

Veritas Capital plans to expand its Peraton portfolio company through the $3.4 billion merger of providers of government IT services.
Matthew HellerDecember 8, 2020

Northrop Grumman is selling its federal IT unit to an affiliate of private equity firm Veritas Capital for $3.4 billion to focus on its core defense businesses.

Veritas plans to combine the Northrop business with its Peraton portfolio company, which provides intelligence, cyber and homeland security services to federal agencies and commercial entities.

“This divesture allows us to drive value and reflects our strategy of focus on growing core businesses where technology and innovation are the key differentiators,” Northrop CEO Kathy Warden said in a news release.

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As Washington Technology reports, “Over the past five years, Northrop has realigned its technology services business through several moves and changes in focus with the goal to tie that unit’s work closer to the company’s core defense technology focus.”

The IT business, which is expected to generate $2.3 billion in revenue in 2020, provides services in cybersecurity, data analytics, cloud, mission-critical application development and advanced engineering to agencies in the defense, intelligence, space, civilian and health markets.

Northrop’s decision to sell the business “does not translate to an exit from IT as a whole necessarily,” Washington Technology said. “The company still has a large cybersecurity business for instance and software is a big part of what they do for the platforms.”

Veritas acquired the former Harris Corp. IT business for $690 million in April 2017 and renamed it Peraton. The government technology market has been a key focus for Veritas since it was founded in 1992.

“The federal IT and mission support services business of Northrop Grumman has an exceptional track record of delivering innovative technology that addresses the critical needs of its government agency customers,” Veritas CEO Ramzi Musallam said.

“We believe that with our focus, vision and resources, we can create a scaled, technology-enabled services platform that is well-positioned for long-term growth and able to deliver unparalleled support to a broad range of critical government missions,” he added.

Peraton has close to $1 billion in revenue and previously acquired  communications infrastructure company Strategic Resources International and space support firm Solers.

Jeffrey MacMillan/For Washington Post