September 9, 2013 / 9:50 PM / 5 years ago

UPDATE 1-SAIC board approves services business spin-off

* SAIC renamed as Leidos; to trade as “LDOS” on NYSE from Sept 30

* John Jumper to head Leidos

* Tony Moraco to lead Science Applications

Sept 9 (Reuters) - U.S. government IT contractor SAIC Inc said its board approved the spin-off of its services business, as the company looks to aggressively bid for more government contracts.

SAIC decided to split the company into two in August 2012, as it was unable to pursue certain government contracts as a single company due to conflict-of-interest regulations.

“The spin allows us to eliminate any perception of organizational conflicts of interest, enabling us to pursue a new world of market opportunities with an integrated enterprise approach,” Group President Tony Moraco, who will head the new entity, said in a statement.

U.S. regulations prohibit a company from being a program manager on behalf of the government to hire contractors for a project, and also bid for the same contract.

The new company, to be called Science Applications International Corp, will focus on government technical services and enterprise IT business. SAIC will be renamed as Leidos Holdings Inc and provide science and technology services for national security, engineering and health markets.

Science Applications will raise about $500 million in debt to pay a cash dividend of $295 million to SAIC before completion of the spin-off.

SAIC intends to use the net proceeds for general corporate purposes.

Leidos will start trading on the New York Stock Exchange on Sept. 30 under the symbol “LDOS”, while Scientific Applications will continue trading under the old “SAI” symbol.

The company also declared a pro-rata dividend, effective Sept. 27 and approved a 1-for-4 reverse split of Leidos common stock that will take effect immediately after the spin-off on Sept 30.

Leidos will be led by John Jumper, currently chairman and CEO of SAIC.

Shares of the company rose nearly 3 percent in after-market trading. They closed at $14.44 on the New York Stock Exchange on Monday.

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