Leidos to acquire Entrust for $2.4bn, doubling energy business
All-cash transaction expected to be immediately accretive, expanding utility infrastructure footprint to 5,500 professionals
Leidos Holdings has agreed to acquire power design firm ENTRUST Solutions Group for $2.4 billion in an all-cash transaction that will more than double the size of the Reston, Virginia-based contractor's energy infrastructure engineering business.
The deal, announced Monday, is expected to close by the end of the second quarter of 2026 and represents a significant bet on the expanding utility infrastructure market as the United States invests in modernizing its power grid. ENTRUST is being sold by private equity firm Kohlberg & Company.
The acquisition will expand Leidos' existing energy infrastructure business from $600 million to more than $1.2 billion in revenue, creating a combined entity with over 5,500 energy professionals, according to company statements. The transaction is expected to be immediately accretive to revenue growth and adjusted EBITDA margin upon closing, with accretion to non-GAAP diluted earnings per share projected for 2027.
Leidos, which closed Friday at $191.23, is funding the acquisition through a combination of new debt, cash on hand, and commercial paper. The stock has declined approximately 2% over the past week and currently trades at a market capitalization of $24.5 billion.
The transaction aligns with Leidos' NorthStar 2030 growth strategy, which prioritizes engineering and technology for secure energy infrastructure. The company described the deal as "a key step" in supporting national efforts to expand America's energy infrastructure and improve its reliability and resilience.
ENTRUST Solutions Group provides engineering and design services to utilities across the United States, with particular strength in the gas and electric generation infrastructure markets. The acquisition will bring Leidos access to growing utility budgets and complementary customer relationships, expanding its footprint in a sector benefiting from increased government and private investment in grid modernization.
"This transaction accelerates our position as a leading engineering solutions provider for utilities across the nation," Leidos stated in the announcement, noting that the deal will "broaden Leidos' client base and enhance its ability to drive innovation for a more diverse set of utility customers."
Analyst reaction to the deal has been measured, with initial commentary characterized as "M&A and capital structure analyst neutral". Some analysts have pointed to the financing structure, which will increase Leidos' debt load, as well as the integration challenges of combining two large engineering organizations.
Leidos currently trades at 17.9 times trailing earnings and 14.9 times forward earnings, with an average analyst target price of $219, according to market data. Of 15 analysts covering the stock, nine rate it a buy or strong buy, while six recommend hold.
The company, which emerged from a spin-off of Science Applications International Corporation (SAIC), generated $17.3 billion in revenue over the trailing twelve months with an EBITDA of $2.34 billion. Its diversified portfolio spans defense, aviation, information technology, and biomedical research sectors.
The acquisition of ENTRUST represents Leidos' most significant deal since its strategic pivot toward energy infrastructure services. The move comes as utilities and energy companies face increasing pressure to upgrade aging infrastructure and invest in renewable energy capabilities, creating substantial opportunities for engineering and design services providers.
The closing of the transaction remains subject to customary conditions, including receipt of regulatory approvals. Leidos said it expects to provide additional details about the financial impact and integration plans during its next earnings call.