Lockheed Martin (NYSE:LMT) | Acquisitions & Divestures

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Lockheed Martin seeks to strengthen its portfolio of products and services to meet the current and future needs of its customers. The company accomplishes this in part by its independent research and development activities, and through acquisition, divestiture, and internal realignment activities. Lockheed Martin selectively pursues the acquisition of businesses and investments that complement its current portfolio and allow access to new customers or technologies. Lockheed Martin has made a number of niche acquisitions of businesses and investments in affiliates during the past several years. Lockheed Martin also may explore the divestiture of businesses. In pursuing its business strategy, Lockheed Martin routinely conducts discussions, evaluates targets, and enters into agreements regarding possible acquisitions, divestitures, joint ventures, and equity investments. As part of its business strategy, Lockheed Martin seeks to identify acquisition or investment opportunities that will expand or complement the company's existing products and services, or customer base, at attractive valuations.




Acquisitions



On March 12, 2014, Lockheed Martin announced its acquisition of Industrial Defender, a leading provider of cyber security solutions. The terms of the agreement were not disclosed but are not material to Lockheed Martin operations. Industrial Defender is a privately held company headquartered in Foxborough, MA with more than 130 employees.

Lockheed Martin spent $269 million in 2013 for acquisition activities, primarily related to the acquisition of businesses. In 2013, the company acquired Amor Group, a United Kingdom-based company specializing in information technology, civil government services, and the energy market. This acquisition is aligned with Lockheed Martin's strategy to grow international sales and is now part of the IS&GS business segment.

Lockheed Martin used $304M in 2012 for acquisition activities including the acquisitions of Chandler/May and CDL both in the fourth quarter of 2012, and Procerus in the first quarter of 2012, and each has been included within the company's MST business segment. These companies specialize in the design, development, manufacturing, and support of advanced unmanned systems.

Lockheed Martin used $649M in 2011 for acquisition activities including the acquisition of QTC, which provides outsourced medical evaluation services to the U.S. Government, and Sim-Industries B.V., a commercial aviation simulation company. QTC has been included within Lockheed Martin's IS&GS business segment, and Sim-Industries has been included within the MST segment. Both acquisitions occurred in the fourth quarter of 2011.




Divestitures



Amounts related to discontinued operations in 2012 were not significant and, accordingly, were included in operating profit. Discontinued operations for 2011 include the operating results and other adjustments of Savi Technology, Inc. (Savi), a logistics business that was in Lockheed Martin's former Electronic Systems business segment sold in the third quarter of 2012, and Pacific Architects and Engineers, Inc. (PAE), a business formerly within the IS&GS business segment sold in the second quarter of 2011.

In November 2010, Lockheed Martin closed on the sale of EIG, a business within the IS&GS business segment, for $815M and recognized a gain, net of tax, of $184M in 2010, which is included in discontinued operations. Lockheed Martin received proceeds, net of $17M in transaction costs, of $798M related to the sale, which are included in investing activities on Lockheed Martin's 2010 Statement of Cash Flows. Lockheed Martin made a $260M tax payment related to the sale which is included in operating activities on the 2010 Statement of Cash Flows.

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