Leidos to Buy ENTRUST for $2.4B Cash Deal, Aiming to “Turbocharge” Energy Growth by 2026

Core Insights - Leidos is acquiring ENTRUST Solutions Group for $2.4 billion in an all-cash deal to enhance its energy business, which is described as a "hidden gem" with double-digit growth and margins [2][5][9] - The acquisition aligns with Leidos' "North Star 2030" strategy, focusing on growth in power and energy infrastructure engineering services [3][4] - The deal is expected to close in Q2 2026 and will be accretive to adjusted EPS in 2027, with significant synergies anticipated [4][11][12] Company Overview - Leidos is a technology and engineering company providing services to government and commercial customers, with a focus on national security, defense, and civil government markets [17] - The company has a strong emphasis on systems integration, engineering, cybersecurity, and data analytics [17] Acquisition Details - The acquisition will add approximately 3,100 employees to Leidos and position it as a top-4 U.S. power and transmission & distribution engineering provider [5][8] - ENTRUST is expected to contribute about $650 million in annual revenue, implying a purchase multiple of approximately 16x next-12-month EBITDA [4][9][10] - Leidos plans to finance the acquisition through a combination of bonds, cash, and commercial paper, with a committed bridge facility in place [4][12] Strategic Fit - The acquisition is seen as creating an "integrated platform" for engineering and program management across various energy sectors, enhancing cross-selling opportunities [6][8] - Leidos aims to leverage ENTRUST's capabilities to increase its exposure to electric power generation and gas markets [6][14] Market Context - The deal is positioned within broader trends in energy infrastructure investment, including rising electricity demand and a focus on grid reliability and security [14] - Leidos expects to enhance its cybersecurity capabilities in the utility market as part of the expanded platform [14] Cultural and Operational Considerations - Due diligence indicated a strong cultural fit between Leidos and ENTRUST, with similar organizational structures and compensation levels [7] - The integration will be managed by the same leadership team that successfully completed a prior acquisition, focusing on technology application rather than workforce reduction [16]