Arab Today, arab today lockheed martin to buy fabled helicopter maker sikorsky
Last Updated : GMT 07:58:57
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Arab Today, arab today

Lockheed Martin to buy fabled helicopter maker Sikorsky

Arab Today, arab today

Arab Today, arab today Lockheed Martin to buy fabled helicopter maker Sikorsky

Sikorsky Seahawk helicopters
New York - AFP

Lockheed Martin said Monday it will buy Sikorsky Aircraft, the storied US maker of the Black Hawk helicopter, in an all-cash $9 billion deal with United Technologies.

"Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies," said Marillyn Hewson, Lockheed Martin chairman, president and chief executive, in a statement.

The purchase of the UTC unit marks Lockheed's biggest deal since the company merged with Martin Marietta Corporation in 1995, a transaction valued at $10 billion at the time.

"The addition of the unit will be seen as a complementary piece to Lockheed Martin's defense business, which counts the F-35 fighter jet in its product stable, and will deepen Lockheed Martin's footprint as the largest defense contractor," Briefing.com said.

The 90-year-old Sikorsky Aircraft manufactures a range of military helicopters, including the famous Black Hawk, used by 25 nations for multi-mission support, and the Seahawk, used in marine operations.

Its Marine One helicopter fleet is used to transport the US president, and last year Sikorsky won a $1.2 billion contract to build the next-generation of Marine Ones.

Although best known for military helicopters, Sikorsky also makes commercial helicopters and fixed-wing aircraft for surveillance and transport missions.

Lockheed said the effective cost of the acquisition would be about $7.1 billion because the companies had agreed to structure the transaction as an asset purchase, generating a tax benefit of some $1.9 billion.

The Bethesda, Maryland-based company said the acquisition was expected early in the first quarter of 2016 at the latest, contingent on regulatory approvals.

According to Lockheed, the purchase will have no impact on dividends or plans to pare share count to below 300 million by end-2017.

Lockheed, which employs about 112,000 people worldwide, had net revenue of $45.6 billion in 2014.

Sikorsky's 2014 sales jumped 19 percent year-over-year, to $7.5 billion, but its operating profit was down by more than half at $219 million.

Sikorsky was founded in 1925 in New York by aviation pioneer Igor Sikorsky, an aeronautic engineer who left Russia for the United States after the Bolshevik revolution. Now headquartered in Stratford, Connecticut, Sikorsky has more than 15,000 employees.

"It looks as though this would represent more than a bolt-on for Lockheed Martin, as it would be a significant revenue booster," said analyst Chris Lange at 24/7 Wall St.

- UTC sharpens focus -

"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," said president and CEO Gregory Hayes in a separate statement.

UTC businesses include Otis elevators, Pratt & Whitney engines, and aircraft equipment and systems. The company had $65.1 billion in net sales in 2014.

UTC said the net proceeds from the Sikorsky sale would be used to buy back additional shares.

Lockheed separately reported Monday second-quarter net earnings of $929 million, up from $889 million in the year-ago quarter, with a sharp jump in cash from operations to $1.3 billion.

In addition to announcing the Sikorsky acquisition, Lockheed said it was launching a strategic review of its government IT infrastructure services business and its technical services business.

The company raised its 2015 forecast for earnings per share to $11.00-$11.30 from its April estimate of $10.85-$11.15.

Dow member UTC dipped 0.2 percent to finish trade at $110.48, while Lockheed rose almost two percent to $205.13.

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