Lockheed Martin to buy Sikorsky for $9 billion
World’s largest military contractor would add helicopters to its line.
Lockheed Martin said Monday that it would buy Sikorsky Aircraft, the maker of the Black Hawk helicopters favored by the U.S. military, from United Technologies Corp. for $9 billion in cash.
The deal would further bolster Lockheed’s status as the world’s biggest military contractor, giving it another major business line in addition to its already hugely popular military equipment, including the F-35 fighter jet.
The transaction would be structured in a way that generates a tax benefit of about $1.9 billion for Lockheed Martin and its shareholders, effectively reducing the purchase price to $7.1 billion, Lockheed said.
The Sikorsky business, which has been part of United Technologies for decades and is based in Stratford, Connecticut, recorded net sales of $7.5 billion in 2014 and had more than 15,000 employees.
“Sikorsky is a natural fit
for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies,” Marillyn Hewson, the Lockheed Martin chairwoman, president and chief executive, said in a news release.
“Together, we’ll offer a strong portfolio of helicopter solutions to our global customers and accelerate the pace of innovation and new technology development.”
The deal is subject to regulatory approval and is expected to close by late fourth quarter 2015 or early first quarter 2016.
The combination of Lockheed and Sikorsky would likely be scrutinized by the Defense Department, which has indicated that it wants to preserve competition among military contractors.
Lockheed said it expected to add Sikorsky to its Lockheed Martin Mission Systems and Training business segment following the deal.
The sale follows a review of strategic alternatives for the 90-yearold Sikorsky business that United Technologies conducted this year.
In June, United Technologies said that it was considering selling or spinning off the business this year. That same month, Sikorsky said that it planned to cut up to 1,400 jobs, or about 9 percent of its workforce.
Divesting Sikorsky would help simplify the business mix of United Technologies, whose products include Otis elevators, Carrier air conditioners and Pratt & Whitney jet engines.
Based in Hartford, Connecticut, United Technologies posted net sales of $65.1 billion and had more than 211,000 employees in 2014.
Founded on New York’s Long Island in 1925, Sikorsky manufactures and services military and commercial helicopters and fixed-wing aircraft. It was acquired by a predecessor of United Technologies in 1929.
In addition to Black Hawks, Sikorsky makes a range of commercial and military helicopters, including the S-76 and the S-92 commercial helicopters and the Seahawk for the military. It is also developing the CH-53K heavy lift helicopter for the Marine Corps and the HH-60W combat rescue copter for the Air Force.
Last year, it won the contract to build the next generation of Marine One helicopters, which are used by the president.
Lockheed Martin, based in Bethesda, Maryland, produces a wide variety of military and aerospace equipment, including jet fighters, ships, tactical vehicles, missiles and satellites. It posted net sales of $45.6 billion in 2014 and has about 112,000 employees.