Lockheed Martin has agreed to separate its Information Systems & Global Solutions (IS&GS) business unit and combine it with US-based defence company Leidos Holdings.

Under the terms of the deal, Lockheed will receive a one-time payment of $1.8bn, while the company’s shareholders will receive approximately 77 million Leidos shares with a projected value of $3.2bn.

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The remaining Leidos shares will be held by the company’s existing shareholders.

Lockheed Martin chairman, president and CEO Marillyn Hewson said: "This strategic transaction is an important milestone in the portfolio reshaping strategy we announced in July 2015 and allows us to focus on our core business in aerospace and defence.

"The combination of our proven IT and technical services businesses with Leidos will create a new leader in the government IT sector."

"The combination of our proven IT and technical services businesses with Leidos will create a new leader in the government IT sector with a diversified portfolio, greater scale and improved efficiency. The new business will be positioned for growth while unlocking value for our stockholders."

The transaction is expected to be completed in the third or fourth quarter of 2016.

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According to Leidos, the company will leverage IS&GS’s world-class expertise, reputation and global reach to offer a broader portfolio of mission-critical IT solutions, as well as services to support customers worldwide.

Lockheed will continue to operate IS&GS until the completion of the deal, which is subject to shareholder approval and the completion of customary conditions, including the receipt of tax counsel opinions.