BETHESDA, Md., July 11, 2016 /PRNewswire/ -- Lockheed
Martin (NYSE: LMT) announced today the commencement of an exchange
offer for the separation of its Information Systems & Global
Solutions (IS&GS) business segment. This represents the next
step in the proposed tax-efficient Reverse Morris Trust transaction
with Leidos Holdings, Inc. (NYSE: LDOS) announced on January 26. In
the proposed transaction, Abacus Innovations Corporation (Abacus),
a wholly-owned subsidiary of Lockheed Martin created to facilitate
the transaction, will merge with a subsidiary of Leidos and become
a wholly-owned subsidiary of Leidos.
The exchange offer provides Lockheed Martin stockholders with
the opportunity to exchange their shares of Lockheed Martin common
stock for shares of Abacus common stock, which will convert into
shares of Leidos common stock upon completion of the merger. The
exchange and the merger are expected to be tax-free to
participating Lockheed Martin stockholders for U.S. federal income
tax purposes, except for any gain or loss attributable to the
receipt of cash in lieu of fractional shares in the merger.
The exchange offer includes several key elements:
- Lockheed Martin is offering to exchange all 76,958,918 shares
of common stock of Abacus for shares of Lockheed Martin that are
validly tendered and not properly withdrawn. Procedures regarding
how to tender and withdraw shares will be specified in the exchange
offer materials distributed to stockholders.
- Lockheed Martin stockholders have the opportunity to exchange
all, some or none of their shares of Lockheed Martin common stock
for shares of Abacus common stock, subject to proration if the
exchange offer is oversubscribed. Each share of Abacus stock will
be converted into one share of Leidos common stock upon completion
of the merger.
- The exchange offer is designed to permit Lockheed Martin
stockholders to exchange their shares of Lockheed Martin common
stock for a number of shares of Abacus common stock that
corresponds to a 10 percent discount in value, calculated as set
forth in the exchange offer materials, to the equivalent amount of
Leidos common stock based on the merger exchange ratio described
below, subject to an upper limit.
- This discount means that tendering Lockheed Martin stockholders
are expected to receive approximately $111 in value of Abacus common stock for every
$100 of Lockheed Martin common stock.
This is subject to an upper limit of 8.2136 shares of Abacus common
stock per share of Lockheed Martin common stock. If the upper limit
is in effect, then the exchange ratio will be fixed at that limit
and tendering stockholders will receive less than $111 in value of Abacus stock for each
$100 of Lockheed Martin common stock
and could receive much less.
- Lockheed Martin will determine the ratio at which shares of
Lockheed Martin common stock and Abacus common stock will be
exchanged based on the simple arithmetic average of the daily
volume-weighted average prices of shares of Lockheed Martin common
stock and Leidos common stock on the NYSE on each of three
valuation dates ending on the third trading day prior to the
expiration of the exchange offer, subject to the exchange ratio
upper limit. In the case of Abacus common stock, the value will be
reduced by $13.64 per share, which
equals the per-share amount of the approximately $1.0 billion special dividend to be paid to
Leidos stockholders in connection with the transaction.
- The exchange offer will be subject to proration in the event of
oversubscription.
- The exchange offer is scheduled to expire at 8:00 a.m. on August 16,
2016, unless Lockheed Martin extends or terminates the
exchange offer.
- Abacus common stock will not be transferred to participants in
this exchange offer. Participants will instead receive shares of
Leidos common stock in the merger. No trading market currently
exists or will ever exist for Abacus common stock.
The final exchange ratio showing the number of shares of Abacus
common stock participating Lockheed Martin stockholders will
receive for each share of Lockheed Martin common stock accepted in
the exchange offer will be available at
www.edocumentview.com/LockheedMartinExchange. Lockheed Martin will
also announce the final exchange ratio by press release no later
than 9:00 a.m. on the second trading
day prior to the expiration date.
If the exchange offer is completed but not fully subscribed,
Lockheed Martin will distribute the remaining shares of Abacus
common stock on a pro rata basis to Lockheed Martin stockholders
whose shares of Lockheed Martin common stock remain outstanding
after the completion of the exchange offer.
The transactions are subject to customary closing conditions,
including Leidos stockholder approval and opinions of tax counsel.
Leidos has scheduled a meeting of stockholders to be held on
August 8, 2016.
As a result of the exchange offer, the number of Lockheed
Martin's outstanding shares of common stock will be reduced. As
part of the transaction, Lockheed Martin will also receive a
one-time special cash payment of $1.8
billion, which it will use to repay debt, pay dividends
and/or repurchase its stock.
Immediately after the completion of the transactions,
approximately 50.5% of the outstanding shares of Leidos common
stock are expected to be held by pre-merger Abacus (former Lockheed
Martin) stockholders on a fully diluted basis. Pre-merger Leidos
stockholders are expected to hold approximately 49.5% of the
outstanding shares of Leidos common stock on a fully diluted basis.
Lockheed Martin will not receive or hold any shares of Leidos
common stock.
More information can be found on Lockheed Martin's website and
at www.edocumentview.com/LockheedMartinExchange.
About Lockheed Martin
Headquartered in Bethesda, Maryland, Lockheed Martin is a
global security and aerospace company that employs approximately
125,000 people worldwide and is principally engaged in the
research, design, development, manufacture, integration and
sustainment of advanced technology systems, products and
services.
For more information about the exchange offer, please contact
the information agent, Georgeson.
Georgeson LLC
(866) 482-4931
LockheedMartinExchange@georgeson.com
Cautionary Statement Regarding Forward Looking
Statements
The forward looking statements contained
in this document involve risks and uncertainties that may affect
Lockheed Martin Corporation's ("Lockheed Martin") and Leidos
Holdings, Inc.'s ("Leidos") operations, markets, products,
services, prices and other factors as discussed in filings with the
Securities and Exchange Commission (the "SEC"). These risks and
uncertainties include, but are not limited to, economic,
competitive, legal, governmental and technological factors.
Accordingly, there is no assurance that the expectations of either
company will be realized. This document also contains statements
about Lockheed Martin's agreement to separate a substantial portion
of its government information technology infrastructure services
business and its technical services business, which have been
realigned in the Information Systems & Global Solutions
(IS&GS) business segment, and combine this business with Leidos
in a Reverse Morris Trust transaction (the "Transaction"). Many
factors could cause actual results to differ materially from these
forward-looking statements with respect to the Transaction,
including risks relating to the completion of the transaction on
anticipated terms and timing, including obtaining stockholder and
regulatory approvals, anticipated tax treatment, the dependency of
any split-off transaction on market conditions and the value to be
received in any split-off transaction, unforeseen liabilities,
future capital expenditures, revenues, expenses, earnings,
synergies, economic performance, indebtedness, financial condition,
losses, future prospects, business and management strategies for
the management, expansion and growth of the new combined company's
operations, Leidos' ability to integrate the businesses
successfully and to achieve anticipated synergies, and the risk
that disruptions from the Transaction will harm Lockheed Martin's
or Leidos' business. While the list of factors presented here is
considered representative, no such list should be considered to be
a complete statement of all potential risks and uncertainties.
Unlisted factors may present significant additional obstacles to
the realization of forward-looking statements. Consequences of
material differences in results as compared with those anticipated
in the forward-looking statements could include, among other
things, business disruption, operational problems, financial loss,
legal liability to third parties and similar risks, any of which
could have a material adverse effect on Lockheed Martin's or
Leidos' consolidated financial condition, results of operations or
liquidity. For a discussion identifying additional important
factors that could cause actual results to vary materially from
those anticipated in the forward-looking statements, see Lockheed
Martin and Leidos' filings with the SEC, including "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" in Lockheed Martin's annual report
on Form 10-K for the year ended December 31,
2015 and in Leidos' transition report on Form 10-K for the
11-month period ended January 1, 2016
and quarterly reports on Form 10-Q which are available on the
respective companies websites at http://www.leidos.com
(Leidos) and http://www.lockheedmartin.com
(Lockheed Martin) and at the SEC's website
at http://www.sec.gov. Neither Lockheed
Martin nor Leidos assumes any obligation to provide revisions or
updates to any forward-looking statements should circumstances
change, except as otherwise required by securities and other
applicable laws.
Additional Information and Where to Find It
In connection with the proposed transaction, Abacus Innovations
Corporation, a wholly-owned subsidiary of Lockheed Martin created
for the transaction ("Abacus"), has filed with the SEC a
registration statement on Form S-4/S-1 containing a prospectus and
Leidos has filed with the SEC a proxy statement on Schedule 14A and
a registration statement on Form S-4 containing a prospectus.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE REGISTRATION
STATEMENTS/PROSPECTUSES AND PROXY STATEMENT AND ANY AMENDMENTS WHEN
THEY BECOME AVAILABLE AS WELL AS ANY OTHER RELEVANT DOCUMENTS,
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PARTIES AND
THE PROPOSED TRANSACTION. Investors and security holders may obtain
a free copy of the prospectuses and proxy statement and other
documents filed with the SEC by Lockheed Martin, Abacus and Leidos
at the SEC's web site at http://www.sec.gov.
Free copies of these documents and each of the companies' other
filings with the SEC, may also be obtained from the respective
companies websites at http://www.leidos.com (Leidos)
and http://www.lockheedmartin.com (Lockheed
Martin).
This communication is not a solicitation of a proxy from any
investor or security holder. However, Leidos, Lockheed Martin, and
certain of their respective directors, executive officers and other
members of management and employees, may be deemed to be
participants in the solicitation of proxies from stockholders of
Leidos in respect of the proposed transaction under the rules of
the SEC. Information regarding Leidos' directors and executive
officers is available in Leidos' Transition Report on Form 10-K
filed with the SEC on February 26,
2016 and in its proxy statement for its annual meeting of
stockholders filed on July 7, 2016.
Information regarding Lockheed Martin's directors and executive
officers is available in Lockheed Martin's 2015 Annual Report on
Form 10-K filed with the SEC on February 24,
2016, and in its definitive proxy statement for its annual
meeting of stockholders filed on March 11,
2016. These documents can be obtained free of charge from
the sources indicated above. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the registration statements, prospectuses and
proxy statement and other relevant materials to be filed with the
SEC when they become available.
This communication shall not constitute an offer to sell or
the solicitation of an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
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SOURCE Lockheed Martin