Lockheed Martin is separating its information systems and global solutions unit, combining it with the engineering company Leidos so that it can focus on its remaining aerospace and defense business.
The division has about $5 billion in sales and more than 16,000 employees globally.
Lockheed Martin Corp. will receive a special one-time payment of $1.8 billion. The Bethesda, Maryland-based company's shareholders will receive approximately 77 million Leidos shares with an estimated value of $3.2 billion.
Existing shareholders of Leidos Holdings Inc. will continue to hold the remaining outstanding shares.
Reston, Virginia-based Leidos is expected to pay its shareholders a special dividend of about $1 billion. The deal still needs approval from Leidos shareholders. It is expected to close in the second half of the year.