Leidos Holdings Inc. (NYSE: LDOS) agreed to acquire ENTRUST Solutions Group from Kohlberg & Co. for $2.4 billion in cash, expanding its energy infrastructure engineering business into regulated utility markets.[1][3][7] The deal, funded through debt and cash on hand, targets rising U.S. utility spending on grid modernization amid aging infrastructure and extreme weather risks, with closure expected by Q2 2026 pending approvals.[1]
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Deal Rationale and Strategic Fit
Leidos, a Reston, Virginia-based government contractor with $600 million in annual energy infrastructure revenue, gains ENTRUST’s expertise in electric and gas utilities across generation, transmission, and distribution.[1] CEO Tom Bell described the acquisition as a step in Leidos’ growth strategy, supporting national priorities for energy reliability and resilience.[1] ENTRUST, acquired by Kohlberg in 2019 with a 2023 recapitalization, provides nationwide engineering services to utilities, scaling Leidos’ presence in a sector facing sustained capital investment.[3]
Financial Terms and Impact
The all-cash transaction is immediately accretive to revenue growth and adjusted EBITDA margins, with earnings benefits in 2027.[1] As of October 2025, Leidos held $974 million in cash equivalents, enabling funding alongside debt without immediate equity dilution.[1] For Kohlberg, the sale marks a successful private equity exit strategy in infrastructure services after seven years of ownership.[3]
| Metric | Details |
|---|---|
| Deal Value | $2.4 billion (all-cash) |
| Leidos Energy Revenue (Pre-Deal) | $600 million annually |
| Funding | Debt + $974M cash (Oct 2025) |
| Accretion | Immediate to revenue & EBITDA; EPS in 2027 |
| Expected Close | Q2 2026 |
Market Context: Utility Infrastructure Trends
U.S. utilities face pressure to upgrade aging grids for extreme weather resilience and growing electricity demand, driving long-term engineering spend.[1] This acquisition aligns with **cross-border M&A trends 2025** in infrastructure, where strategic buyers like Leidos pursue stable, regulated revenue streams amid volatile defense budgets.[1][5] Similar deals include Leidos’ prior expansions and peer moves into power delivery, positioning the combined entity for utility engineering growth.
Industry Implications and Risks
The deal bolsters Leidos’ NorthStar 2030 strategy, complementing partnerships like OpenAI for AI in defense and infrastructure.[5] Regulatory approvals remain a key risk in utility M&A, though the domestic focus limits antitrust hurdles.[1] For investment professionals tracking **private equity exit strategies in infrastructure**, Kohlberg’s sale highlights multiple expansion in engineering services platforms.[3]
- Expands Leidos’ utility exposure nationwide.
- Capitalizes on grid hardening mandates.
- Enhances engineering synergies across power chain.
Leidos stock reactions reflect mixed analyst views, with some upgrades offset by hold ratings amid broader market pressures in industrials and utilities.[2][6]
Sources
https://www.benzinga.com/m-a/26/01/50124806/leidos-buys-entrust-in-2-4-billion-power-infrastructure-bet, https://markets.financialcontent.com/stocks/?PageName=CURRENCY, https://www.businesswire.com/newsroom/industry/technology/electronic-design-automation, https://www.01net.it/kohlberg-announces-sale-of-entrust-solutions-group-to-leidos-for-2-4-billion/, https://finviz.com/news/286828/next-generation-rf-systems-move-to-the-center-of-global-defense-spending, https://www.marketbeat.com/stocks/NYSE/LDOS/news/, https://www.morningstar.com/news/dow-jones/202601263699/dow-jones-top-company-headlines-at-9-am-et-quantum-computing-company-ionq-to-buy-chip-maker-skywater-for-18-billion-allied
