LMT, LDOS: What to Know About the $5B Lockheed Martin-Leidos Deal

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Lockheed Martin (LMT) has entered into an agreement with and Leidos (LDOS) to have it merge with its Information Systems & Global Solutions (IS&GS) division.

lmt-ldos-lockheed-martin-leidosThe deal between Lockheed Martin and Leidos will be a Reverse Morris Trust transaction that is valued at $5 billion. The deal will give LMT shareholders more than 50% of LDOS shares and the remainder will belong to LDOS shareholders.

Leidos merging with Lockheed Martin’s IS&GS business will include a payment of $1.8 billion in cash. LMT will use this money to pay off debt, pay dividends and repurchase shares. The deal will also have LDOS paying a special $1 billion dividend to shareholders.

Following the completion of the deal, current Leidos Chairman and CEO Roger Krone will keep his roles with the company. It will also retain its current CFO and will stay at its headquarters in Reston, Va. Lockheed Martin will be allowed to assign three directors to the company’s board.

Lockheed Martin and Leidos are expecting the deal to come to a close during the second half of 2016 following regulatory and shareholder approval.

LMT shares were down 2% and LDOS shares were down 7% as of Noon Tuesday.

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