Lockheed Martin (LMT) Announces Prelim. Results of Exchange Offer in Connection with Transaction to Separate IS&GS

August 16, 2016 11:26 AM EDT

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Lockheed Martin (NYSE: LMT) announced today the preliminary results of its exchange offer for shares of Lockheed Martin common stock in connection with the previously announced transaction to separate its Information Systems & Global Solutions (IS&GS) business segment and combine it with Leidos Holdings, Inc. (NYSE: LDOS) in a tax-efficient Reverse Morris Trust transaction.

Lockheed Martin expects to accept shares tendered in the exchange offer, subject to proration, and expects, through the split-off structure, to repurchase 9,369,694 of its shares of common stock upon closing of the transaction. Closing is expected to occur later today immediately following the satisfaction of all remaining closing conditions and consummation of the exchange offer. In connection with the closing of the transaction, Lockheed Martin will receive a special cash payment of $1.8 billion, which will be used for repayment of debt, dividends and/or share repurchases.

The final exchange ratio for the exchange offer was set at 8.2136 shares of common stock of Abacus Innovations Corporation (Abacus) for each share of Lockheed Martin common stock. Upon completion of the merger of Abacus with a subsidiary of Leidos, each share of Abacus common stock will be converted into one share of Leidos common stock. As a result, Lockheed Martin stockholders who tendered shares of Lockheed Martin common stock in the exchange offer will receive approximately 8.2136 shares of Leidos common stock (subject to the receipt of cash in lieu of fractional shares) for each share of Lockheed Martin common stock accepted for exchange.

Exchange Offer Preliminary Results

Pursuant to the exchange offer, which expired today at 8:00 a.m. EDT, and based on a preliminary count by the exchange agent, approximately 96,116,351 shares of Lockheed Martin common stock were tendered prior to the expiration of the exchange offer, including 45,859,639 shares tendered pursuant to guaranteed delivery procedures. The total number of shares tendered included an estimated 1,821,061 shares of Lockheed Martin common stock tendered by odd-lot stockholders (holders of fewer than 100 shares) not subject to proration. Lockheed Martin will exchange a total of 9,369,694 shares of Lockheed Martin common stock in the exchange offer.

Based on the total number of shares of Lockheed Martin common stock reported to be tendered and not properly withdrawn prior to the expiration of the exchange offer, the exchange offer was oversubscribed by approximately 86,746,657 shares, including 45,859,639 shares tendered pursuant to guaranteed delivery procedures, resulting in a preliminary proration factor of approximately 8.01 percent.

Lockheed Martin will not be able to determine the final proration factor until after the end of the exchange offer's guaranteed delivery period, which could be as late as 5:00 p.m. EDT on August 19, 2016. Lockheed Martin will publicly announce the final proration factor, which may be different from today's preliminary estimate, once it has been determined.

Because more than 9,369,694 shares of Lockheed Martin common stock were tendered, all shares of Abacus common stock owned by Lockheed Martin are expected to be distributed to Lockheed Martin stockholders who tendered their shares of Lockheed Martin common stock in the exchange offer, and no shares of Abacus common stock are expected to be distributed to Lockheed Martin stockholders as a pro rata dividend.



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