Jacobs Solutions (NYSE: J) is in advanced discussions to combine its critical mission solutions business with Amentum in a transaction that could be worth more than $4 billion and could form a new publicly traded company, Reuters reported Thursday.

Jacobs’ CMS business, which recorded approximately $4.4 billion in fiscal year 2022 revenue, provides data analytics, software application support, cybersecurity and consulting services for defense, intelligence and civilian customers.

Sources said the potential deal would use a Reverse Morris Trust approach to make it a tax-free transaction and create a new entity that would be majority-owned by shareholders at Jacobs.

Jacobs and Amentum owners – private equity firms American Securities and Lindsay Goldberg – are in negotiations over the planned merger and may disclose the deal by Tuesday, Nov. 21, if an agreement is reached, according to people familiar with the matter.

In May, Jacobs announced plans to spin off its CMS business into an independent company that will focus on delivering applied science research, technical consulting, program management, training and intelligent asset management support services to federal government customers. 

At the quarterly earnings call in August, Jacobs CEO Bob Pragada noted that the Dallas-based technical professional services firm had received “positive interest from multiple outside parties” with regard to its planned CMS business spinoff.