The UK Ministry of Defence (MoD) has agreed to sell a 33.8% interest in QinetiQ to the Washington, DC-based Carlyle Group.
The MoD’s will retain a 62.5% current stake in the business for the present, but plans to sell its entire stake in the company within 3-5 years, probably through a flotation on the stock market.
A further 3.7% of the company’s shares are to be made available to employees of the company.
‘QinetiQ will remain a British company based in the UK. The MoD will retain a Special Share in the business to ensure that the nation’s defence and security interests continue to be protected. There will also be robust safeguards to prevent conflicts of interest and to ensure that the integrity of the Government’s procurement process is not compromised,’ said Defence Minister Lewis Moonie.
The sale follows the MoD’s decision in March this year to seek a strategic partner to invest in QinetiQ, and the selection of The Carlyle Group as preferred bidder in September.
The transaction values QinetiQ at around £500m. Following adjustments to reflect current assets and liabilities, the MoD will receive between £140 and £150m from the transaction (the final amount will depend on the company’s exact financial position at completion), in addition to £50m already received from QinetiQ as part of the purchase price for its assets. Subject to the satisfactory fulfilment of a number of final conditions, formal completion of the sale process is expected early in 2003.
QinetiQ’s Board of Directors, chaired by Dame Pauline Neville-Jones, will be augmented by the appointment of two Carlyle nominees – Glenn Youngkin, a Managing Director of The Carlyle Group, and Sir Denys Henderson. The MoD also has the right to appoint two non-executive directors.