QinetiQ, the defence technology company, has agreed to sell its US business to Serco, the outsourcing group, for $292 million.
It will return most of the proceeds to shareholders through an extra £200 million of share buybacks, adding £100 million a year in each of the next two financial years.
That comes on top of its existing buyback programme of £100 million a year.
Chief executive Steve Wadey said the US market had changed and the business lacked the scale to meet QinetiQ's targets for growth and returns.
He said: "The agreed US business sale sharpens QinetiQ's focus on the areas where we see the strongest opportunities for growth."
QinetiQ will now concentrate on the UK, European members of NATO and other close allies.
Serco buys scale
Serco is paying cash for the business on a cash-free, debt-free basis, meaning QinetiQ keeps any cash and settles any debt before the sale.
The US business made an underlying operating profit of $13 million on revenue of $172 million in the first half.
QinetiQ had expected it to bring in $385 million of revenue this year at a margin of around 7%.
Serco's North American division already generates around $2 billion a year of revenue from US federal government work.
The deal needs US competition and foreign investment approvals, as well as clearance for the business's classified work, and should complete in the first quarter of 2027.
Writedown drives loss
The business was valued at £393 million in QinetiQ's accounts, so the price triggered a £175 million non-cash writedown.
That pushed QinetiQ to a statutory pre-tax loss of £87 million in the six months to 30 September, against a £57 million profit a year earlier.
Underlying operating profit rose 14% to £110 million on revenue up 3% at £923 million.
Excluding the US, revenue grew by about 5%.
QinetiQ kept its full-year guidance for 3% to 5% revenue growth and an operating margin of 11% to 11.5%.
The interim dividend rises 33% to 4p.
