AECOM to spin off its government services segment

AECOM announced today it will spin off its management services segment into a standalone government services company. The transaction is set to be complete in the second half of fiscal year 2020.

The company said it expects the new company to "leverage its considerable intelligence, cybersecurity, IT, nuclear remediation and O&M expertise to continue to deliver value and best-of-class services primarily to national government clients, including the U.S. Departments of Defense and Energy and various intelligence and other agencies."

The segment has more than 25,000 employees and generated sales of $3.7 billion in FY-18.

AECOM said John Vollmer, who heads the management services segment, and his team are expected to continue to lead the standalone company. Randy Wotring, AECOM's chief operating officer, has been tapped to serve as chairman of the new company's board of directors.

In a call with analysts Monday, Mike Burke, AECOM's chief executive, said 75 percent of the business' sales comes from the Pentagon and the Energy Department.

He said the separated company will benefit from a "sharpened focus on its core capabilities" and a board of directors more tailored to its work.

"The business will also be in a position to participate in the ongoing consolidation of the government services sector," Burke said.

The transaction is expected to be tax-free, according to AECOM.