Leidos Holdings completed its $2.4 billion all-cash acquisition of ENTRUST Solutions Group on Thursday, adding 1,700 engineers and $1.1 billion in annual revenue to its civil infrastructure segment. The deal closed seventeen days ahead of the February 28 guidance window. ENTRUST's client roster includes 34 of the 50 largest U.S. utilities and 12 independent system operators managing grid reliability across 19 states.
The transaction was announced in October 2024 at 8.2x trailing EBITDA, a 140-basis-point premium to Leidos's own trading multiple at signing. Leidos funded the purchase with cash on hand and a $1.5 billion term loan priced at SOFR plus 175 basis points. Pro forma leverage sits at 2.8x net debt to EBITTA, within the company's stated 2.5x-3.0x operating range. Management projects $75 million in run-rate cost synergies by the end of fiscal 2026, concentrated in back-office consolidation and procurement leverage.
ENTRUST operates in a market segment that did not exist as a discrete investment category eighteen months ago. The firm designs substation upgrades, manages interconnection studies for large loads, and coordinates utility-scale transformer procurement schedules that have stretched from 14 weeks to 68 weeks since 2022. Data center operators are now the largest incremental demand source for transmission capacity in 11 U.S. power markets, and ENTRUST has performed interconnection engineering for 22 hyperscale campuses exceeding 100 MW of contracted load. That customer base includes three of the six largest cloud infrastructure providers and two co-location REITs with over $8 billion in combined market capitalization.
The acquisition gives Leidos exposure to grid constraint without the capital intensity or rate-case risk of owning generation or transmission assets. ENTRUST's margin profile runs 420 basis points above Leidos's legacy civil segment, and 78% of its revenue comes from multi-year program contracts with automatic CPI escalators. The firm also holds a $640 million backlog in Department of Energy grid resilience projects tied to the Infrastructure Investment and Jobs Act, work that carries federal cost-plus structures and runs through fiscal 2028.
Operators should watch three signals over the next six months. First, Leidos will report ENTRUST as a separate line item in its Q1 2025 earnings on May 6, giving the first clean look at organic growth rates and margin accretion. Second, three utilities in PJM Interconnection territory are expected to file grid modernization capital plans with state regulators between April and June, plans that will quantify the backlog of interconnection requests waiting for substation capacity. Third, the Department of Energy is scheduled to announce $2.1 billion in Grid Resilience and Innovation Partnerships grants in Q2, and ENTRUST has submitted bids on $380 million of that program value.
Leidos now controls the engineering layer between hyperscale compute demand and the physical grid, a position with no direct public-market comp. The stock trades at 13.2x forward earnings, a 180-basis-point discount to the aerospace and defense peer group, despite a civil backlog that grew 47% year-over-year in Q4 2024. The first ENTRUST contract announcements are expected within 45 days.