It was announced by Lockheed Martin that it has agreed to partition off its Information Systems & Global Solutions business segment and combine it with Leidos Holdings, Inc. This realignment will create an enterprise capable of providing unrivaled solutions from national security to health and life sciences.
The $5 billion transaction, which is subject to regulatory approval and expected to close in the third or fourth quarter of 2016, includes a $1.8 billion one-time special cash payment to Lockheed Martin. Lockheed has designated that money to repay debt, pay dividends, and/or repurchase its stock. Subject to market conditions, the transaction structure is thought to be a tax-efficient split-off transaction, which would result in a decrease in Lockheed martin share count.
Marillyn Hewson, Chairman, President and CEO of Lockheed Martin stated, “This strategic transaction is an important milestone in the portfolio reshaping strategy we announced in July 2015 and allows us to focus on our core business in aerospace and defense. The combination of our proven IT and technical services businesses with Leidos will create a new leader in the government IT sector with a diversified portfolio, greater scale and improved efficiency. The new business will be positioned for growth while unlocking value for our stockholders.”