WASHINGTON — Bethesda, Maryland-based Lockheed Martin Corp. will spin off its Information Systems & Global Solutions business in a $5 billion deal that will combine those operations with Reston, Virginia-based government security contractor Leidos Holdings Inc.
Lockheed said last summer it was looking for realign its information technology business to focus on 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,” said Lockheed Martin Chief Executive Marillyn Hewson in a statement.
“The new business will be positioned for growth while unlocking value for our stockholders.”
Terms of the deal will result in a $1.8 billion special cash payment to Lockheed Martin. Lockheed shareholders will get 50.5 percent equity in Leidos worth $34.2 billion. Leidos shareholders will own the rest.
Lockheed will use proceeds to repay debt and pay shareholder dividends, it said in a statement.
The deal is still subject to both shareholder and regulatory approval, but is expected to close in late 2016.
Lockheed acquired helicopter maker Sikorsky for $9 billion in November.
