Davis Polk is providing tax and credit advice to Lockheed Martin Corporation (“Lockheed”) in connection with its definitive agreement to separate and combine its realigned Information Systems & Global Solutions (“IS&GS”) business with Leidos Holdings, Inc. (“Leidos”) in a tax-efficient Reverse Morris Trust transaction. In connection with the transaction, Lockheed will receive a one-time special cash payment of $1.8 billion, while its stockholders acquire approximately 50.5% of the outstanding equity in Leidos valued at $3.2 billion. The transaction also contemplates that Leidos will pay a special dividend to its shareholders of approximately $1 billion, contingent on closing of the transaction. The special dividend to Leidos shareholders is expected to be funded through new borrowing by Leidos and cash on hand. The transaction is subject to customary regulatory and shareholder approvals and is expected to close in the third or fourth quarter of 2016.

Headquartered in Bethesda, Maryland, Lockheed is a global security and aerospace company 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 includes partners Neil Barr, Kathleen L. Ferrell and associates Nicole P. Field and Aaron M. Weil. The Davis Polk credit team includes partner James A. Florack and Vanessa L. Jackson. All members of the Davis Polk team are based in the New York office.

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