Lockheed to buy Sikorsky for $9 billion

WASHINGTON - Reuters

AFP photo

Lockheed Martin Corp said on July 20 it would buy Sikorsky Aircraft, the helicopter unit of United Technologies Corp, for $9 billion, and would review the possible sale or spinoff of $6 billion in other information technology and services businesses.

The Pentagon’s largest supplier said the net cost of the Sikorsky deal was around $7.1 billion, taking into account tax benefits resulting from the transaction. Lockheed also reported higher earnings and revenue for the second quarter.

The deal cements Lockheed’s dominance in weapons making and opens key new foreign markets for the company, which dwarves its nearest competitors, the defense business of Boeing Co and Northrop Grumman Corp.

“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies,” Lockheed Chief Executive Marillyn Hewson said in a statement.

Lockheed, which makes F-35 fighter jets, naval ships and high-end government satellites, said the purchase would have no impact on its commitment to return cash to shareholders through dividends and to reduce outstanding share count to below 300 million shares by the end of 2017.

It said it repurchased 4.9 million shares for $937 million in the quarter, up from 0.8 million shares for $124 million in the year earlier period.

Lockheed said it would align Sikorsky under its mission systems and training business, which had already worked closely with Sikorsky on several helicopter programs.

The company expects to close the transaction by late in the fourth quarter of this year, or early in 2016, depending on regulatory approvals.