The new company, Engility, will provide systems engineering and technical assistance to support U.S. Department of Defense customers. L-3 will maintain its cyber security and intelligence businesses, but will combine them under a new National Security Solutions division.

   Engility will be led by L-3 Services Group Vice President Tony Smeraglinolo. L-3 said it expects the move to generate annual revenues of $2 billion as part of an effort to sharpen the company’s focus as government spending on contractors is expected to fall.  

   The move follows calls by L-3’s largest hedge fund shareholder, Relational Investors, to shed nonessential businesses and bolster its lagging stock performance.

   “The reporting persons believe that the market will reward the company with a higher share-price-to-earnings multiple if the company takes strategic and tactical actions to address its business mix. Such actions could include the disposition or spinoff of underperforming or low-growth, low-margin assets,” Relational Investors Director Ralph Whitworth said in an L-3 regulatory filing in June.