(Reuters) - Britain's BAE Systems Plc (BAES.L) is in advanced talks to sell its U.S. manpower and services businesses to private equity firm Veritas Capital Management LLC for more than $1 billion, according to people familiar with the matter.
Were an agreement to be reached, BAE would be the latest defense contractor to shed its less-profitable government consultancy operations in response to lower military spending.
Veritas made a new bid for the assets after BAE's efforts to sell them to another government services contractor, Leidos Holdings Inc (LDOS.N), proved unsuccessful, the people said this week.
Veritas is still trying to secure financing for the acquisition and a deal is not certain, the people added.
The sources asked not to be identified because the negotiations are confidential. BAE and Veritas declined to comment, while Leidos did not respond to a request for comment.
BAE announced in April it would conduct a review of the businesses, which offer government staffing and information technology services, after it received expressions of interest from third parties it did not identify. In July, BAE's CEO said the company was in no rush to sell.
"These are not businesses that we have to sell. It is not a fire sale... It is important to note the transaction will only occur if it creates value for our shareholders," BAE Chief Executive Ian King said on an earnings call with analysts on July 30.
The company has also said a sale would not affect the rest of its U.S intelligence and security businesses, or its cyber security operations.
Other large defense contractors have also soured on the struggling government services sector. Lockheed Martin Corp (LMT.N), for example, said earlier this year that it plans to sell or spin off information technology and services businesses that generate $6 billion in annual revenue.
New York-based Veritas Capital had amassed a portfolio of government services providers. In July, Veritas acquired McLean, Virginia-based Alion Science and Technology Corp an engineering solutions and services that address problems relating to national defense and homeland security.
Reporting by Mike Stone and Greg Roumeliotis in New York; Editing by David Gregorio