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Lockheed would receive a one-time payment of $1.8 billion from
Leidos and own a 50.5 percent equity stake in the company valued
at $3.2 billion.
The $5 billion deal would create the largest government services
provider in the United States, giving Leidos the critical mass
to cope with lower government spending, increased competition
and delays in new contracts, the companies said.
Lockheed, the Pentagon's No. 1 supplier, also reported net
profit rose to $933 million, or $3.01 per share, in the quarter,
from $904 million, or $2.82, in the year-earlier period. It also
had a record backlog of $99.6 billion, including $15.6 billion
contributed by Sikorsky Aircraft, the helicopter maker acquired
from United Technologies Corp last year.
Revenues edged higher to $12.9 billion from $12.5 billion a year
earlier.
Analysts estimated quarterly earnings per share of $2.94 on
$12.36 billion in revenues, according to a poll by Thomson
Reuters I/B/E/S.
Lockheed reported nearly flat net profit of $3.6 billion for
full-year 2015, or $11.46 per share, on revenue of $46.1
billion.
It forecast 2016 revenues rising to a range of $49.5 billion to
$51 billion, and earnings per share at $11.45 to $11.75.
Lockheed Chief Executive Officer Marillyn Hewson said the Leidos
deal would allow Lockheed to focus on its core businesses of
aerospace and defense. The company builds the F-35 fighter jet,
satellites, missile defense equipment and smaller warships.
The deal is subject to regulatory and Leidos shareholders
approvals, but analysts and industry executives do not expect
any significant hurdles.
Lockheed said the deal was planned as a tax-efficient split-off
transaction, which would result in a decrease in Lockheed's
share count. It expects to close the deal in the third or fourth
quarter of 2016.
Leidos said its chief executive and chairman, Roger Krone, would
remain in those jobs as would Chief Financial Officer Jim
Reagan. Lockheed would designate three directors to serve on the
Leidos board, it said.
(Editing by Jeffrey Benkoe)
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