Lockheed Martin Corporation (NYSE:LMT) is planning to merge few of its IT and services segments with another gov. service contractor, according to Reuters citing people close to the matter. The segments are valued at roughly $4 billion.
The anticipated deal would form the biggest government services contractor in the U.S. and would produce an expected windfall of $2 billion for Lockheed, according to the report. The company is preparing to pay down debt after its deal in July to buy Sikorsky Aircraft in a cash transaction valued at $9 billion.
CACI International (NYSE:CACI) and Science Applications International (NYSE:SAIC) are in the initial phase of discussion with Lockheed regarding a Reverse Morris Trust agreement for the assets, a deal that would prevent a heavy tax bill.
LMT has also contacted other firms to identify their willingness in a potential RMT agreement, including Leidos Holdings (NYSE:LDOS) and Booz Allen Hamilton Holding (NYSE:BAH).
The agreement under dialogue is part of a strategic assessment that Lockheed revealed on 20th of July. The company said it would conduct a strategic assessment of government IT and technical services segments in two units with overall expected revenue of $6 billion in 2015, with the target of spinning off the segments or selling them.
The company refused to comment on the story.
Lockheed (LMT) is engaged in manufacturing F-35 fighter jets, government satellites and naval ships. It has been extending its capabilities of weapons-making and shifting away from commoditized services.
The plans being evaluated for spinoff or sale are mainly in IT and government services of Lockheed, though also contains segments in its missiles and fire-control business. The segments have been struggling amid lower government investment, delays in new contracts and increasing competition.
Lockheed has anticipated sales at IT segment to plummet in the mid-single digit percentage range this year.
