Davis Polk provided tax and credit advice to Lockheed Martin Corporation (“Lockheed”) and Abacus Innovations Corporation (“Abacus”), a newly created wholly owned subsidiary of Lockheed, in connection with the separation of Lockheed’s realigned Information Systems & Global Solutions business through an exchange offer of Abacus shares for shares of Lockheed and the subsequent merger of Abacus with a subsidiary of Leidos Holdings, Inc. (“Leidos”) in a tax-efficient Reverse Morris Trust transaction. In connection with the transaction, Abacus entered into a $1,841,450,000 term loan facility (the “Facility”), consisting of (i) a $400 million term loan A facility with a maturity of three years from the closing date of the transaction (the “Closing Date”), (ii) a $310 million term loan A facility with a maturity of five years from the Closing Date and (iii) a $1,131,450,000 term loan B facility with a maturity of seven years after the Closing Date. Citibank, N.A. (“Citibank”) is acting as agent under the Facility. The proceeds of the Facility were used to pay Lockheed a one-time special cash payment (the “Special Cash Payment”) of $1.8 billion and to pay certain fees, costs and expenses related to the transaction.

Lockheed stockholders who participated in the exchange offer received an approximately 50.5% stake in Leidos. The Special Cash Payment, plus the shares of Leidos common stock to be received by participating Lockheed shareholders, resulted in an aggregate transaction value of approximately $4.6 billion.

Headquartered in Bethesda, Maryland, Lockheed is a global security and aerospace company that employs approximately 98,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Leidos, a joint spin-off of Science Applications International Corporation, is a defense company headquartered in Reston, Virginia, that provides scientific, engineering, systems integration and technical services.

The Davis Polk tax team included partners Neil Barr and Kathleen L. Ferrell and associates Nicole P. Field, Rachel Lerner, Aaron M. Weil and Samantha Jacoby. The credit team included partner James A. Florack and associates Vanessa L. Jackson, Christopher Nairn and Brittany E. Buhler. All members of the Davis Polk team are based in the New York office. 
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