Unisys Corporation (NYSE: UIS) had a good day in Thursday’s trading session. The stock gapped up to close the day with gains of 45.95%. This came after the company announced that, it was selling its U.S federal business for $1.2 billion. The value of the deal is a premium and was 13X, the company’s adjusted EBITDA.
The company announced that it would use money from the deal to cut down on debts, and also reduce on its pension obligations. By doing this, it hopes to improve its balance sheet, and also better enhance its financial stability. The company further announced that, its board was unanimous in approving the deal and that, it is expected to be closed within H1 of 2020, subject to customary conditions. The Federal business has over 1900 associates and generated about $689 million in the quarter ending September 30th 2019.
Commenting on the deal, CEO Peter Altabef said that, the deal was at a significant premium, and was a tribute of the attractiveness that the company’s federal colleagues had built over the years. He also announced that, under the leadership of Venkapathi Puvvada, the federal unit has come to be an innovator in the federal market. He added that, under Puvvada, the unit had leveraged on the power of intellectual property and a world class team to run successfully. He also stated that, the money will be used to improve the balance sheet, create operational flexibility, and improve its ability to better serve its clients.
From a look at its price action, yesterday’s gap up saw the stock open at $16.65. It then traded between $15.35 and $17.99 before closing the day at $16.20. Volumes stood at 8.55 million in the day.
About Unisys Corporation
Unisys Corporation is an information technology company. It offers cloud and infrastructure services, business process outsourcing among others. The company is based in Blue Bell, Pennsylvania.