(Adds details of the deal and background)
Nov 20 (Reuters) - Engineering consultant Jacobs Solutions Inc said on Monday it will spin off and merge its government consulting businesses with rival contractor Amentum Services Inc and receive $1 billion in cash proceeds at the closing of the deal.
Jacobs said in a statement it expects to have up to 63% stake in the combined company, with 51% held by shareholders and 7.5-12% retained by the company.
The combined entity, which will include units Critical Mission Solutions (CMS) and Cyber & Intelligence government services, will become a new publicly listed company, Jacobs added.
The company had said in May it was
a tax-free spin-off of the CMS business to streamline its operations and boost margins.
told Reuters in October that the CMS unit could be valued at more than $4 billion.
The CMS platform provides cybersecurity, data analytics and software application services and consulting to civilian, defense and intelligence clients in industries including space, national security, nuclear waste and 5G technology.
Jacobs said it will use the cash proceeds to repay debt, and will dispose its retained stake in the combined company within 12 months.
John Heller, the current chief executive of Amentum, will serve as the CEO of the combined company, while Jacobs' Executive Chair Steve Demetriou will become the executive chair of the combined company.
Jacobs will retain its data solutions and digital technologies business after the spin-off. (Reporting by Akanksha Khushi and Utkarsh Shetti in Bengaluru; Editing by Rashmi Aich and Eileen Soreng)