Lockheed Martin to Buy Sikorsky for $9 Billion

Lockheed Martin announced today, July 20, that it has entered into a definitive agreement to acquire Sikorsky Aircraft, a world leader in military and commercial rotary-wing aircraft, from United Technologies Corporation (UTC) for $9.0 billion. The company says that the price is effectively reduced to approximately $7.1 billion, after taking into account tax benefits resulting from the transaction.

“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defence products and technologies,” said Marillyn Hewson, Lockheed Martin chairman, president and CEO. “I’m confident this acquisition will help us extend our core business into the growing areas of helicopter production and sustainment. 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 acquisition is subject to customary conditions, including securing regulatory approvals, and is expected to close by late 2015 or early 2016. The Corporation plans to align Sikorsky under the Lockheed Martin Mission Systems and Training (MST) business segment. MST and Sikorsky already partner on a number of significant programmes, including the VH-92 Presidential Helicopter, Combat Rescue Helicopter and the Naval MH-60 helicopter.

Separately, Lockheed Martin will conduct a strategic review of alternatives for its government IT and technical services businesses, primarily in the Information Systems & Global Solutions business segment and a portion of the Missiles and Fire Control business segment. The programmes to be reviewed represent roughly $6 billion in estimated 2015 annual sales and more than 17,000 employees. The IS&GS programmes that are not included in the strategic review are mostly focused on defence and intelligence customers and will be realigned into the Corporation’s other four business segments following completion of the review.

Commenting of the sale, UTC President and Chief Executive Officer Gregory Hayes said: “Exiting the helicopter business will allow UTC to better focus on providing high-technology systems and services to the aerospace and building industries and to deliver improved and sustained value to our customers and shareowners. Sikorsky’s acquisition by Lockheed Martin, one of the world’s leading aerospace and defence companies, will ensure it remains a technology leader at the forefront of vertical lift. We are committed to working closely with Lockheed Martin to execute a seamless transition for customers and employees.” UTC says that proceeds from the sale are expected to be used to fund additional share repurchase to offset the earnings impact related to the sale. Alan Warnes