Lockheed Martin spins off IT services in $5 billion deal with Leidos
The structure of Lockheed Martin is shifting. Today the Maryland-based securities and aerospace firm announced that it is separating out its Information Systems and Global Solutions (IS&GS) segment and folding it into security solutions business Leidos Holdings Inc.
RELATED CONTENT: Is your IT department up to speed on IoT?
In addition to allowing Lockheed Martin to streamline its own services, the move is touted as a tax-efficient strategy that also promises to bring significant value to the company’s stockholders. In addition to the one-time cash payment of $1.8 billion that Lockheed Martin will receive for the segment, Lockheed Martin stockholders will acquire 50.5 percent equity in Leidos—a portion of approximately 77 million shares valued at $3.2 billion.
“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,” said Lockheed Martin Chairman, President and CEO Marillyn Hewson in a statement from the company. “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.”
RELATED CONTENT: Facebook looks to buy drone maker Titan Aerospace
Upon regulatory approval, as well as approval by Leidos shareholders, Lockheed Martin expects the transaction to close by fourth quarter of 2016 at the latest.