Lockheed Martin to strengthen helicopter portfolio with Sikorsky Aircraft acquisition

BETHESDA, Md., 22 July 2015. Lockheed Martin (NYSE:LMT) has entered into a definitive agreement to acquire Sikorsky Aircraft, maker of military and commercial rotary-wing aircraft based in Stratford, Conn., for $9.0 billion from United Technologies Corp. (UTC).

Jul 22nd, 2015
Helicopter
Helicopter

BETHESDA, Md., 22 July 2015.Lockheed Martin (NYSE:LMT) has entered into a definitive agreement to acquire Sikorsky Aircraft, maker of military and commercial rotary-wing aircraft based in Stratford, Conn., for $9.0 billion from United Technologies Corp. (UTC).

Lookheed Martin officials plan to align Sikorsky under the Lockheed Martin Mission Systems and Training (MST) business segment. MST and Sikorsky currently partner on such programs as the VH-92 Presidential Helicopter, Combat Rescue Helicopter, and the Naval MH-60 Helicopter.

Lockheed Martin managers 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 programs to be reviewed represent roughly $6 billion in estimated 2015 annual sales and more than 17,000 employees.

“As global security market dynamics shift, this review will strengthen our competitive posture, enabling sustained, profitable growth and positioning Lockheed Martin to deliver value for customers, shareholders and employees,” explains Lockheed Martin Chairman, President, and CEO Marillyn Hewson.

“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies,” Hewson says. “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 fourth quarter 2015 or early first quarter 2016.

Tax benefits resulting from the transaction effectively reduce the purchase price to approximately $7.1 billion, officials say. That is, Lockheed Martin and UTC agreed to make a joint election under Section 338(h)(10) of the Internal Revenue Code, which treats the transaction as an asset purchase for tax purposes. The election generates a tax benefit with an estimated present value of $1.9 billion for Lockheed Martin and its shareholders.

Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 112,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products, and services. Net sales for 2014 were $45.6 billion.

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