Lockheed Martin Corp., the largest U.S. weapons maker, has agreed to buy United Technologies Corp.’s Sikorsky Aircraft unit
20th Jul 2015
Lockheed Martin Corp., the largest U.S. weapons maker, has agreed to buy United Technologies Corp.’s Sikorsky Aircraft unit, the maker of Black Hawk helicopters, for more than $8-billion (U.S.), a source familiar with the negotiations said on Sunday.
The two companies plan to announce the deal on Monday before both report second-quarter results on Tuesday, said the source, who was not authorized to speak publicly.
It will be Lockheed’s largest acquisition since it bought Martin Marietta Corp. for about $10-billion two decades ago, and the first major strategic move for both United Tech chief executive officer Greg Hayes, who was elevated to CEO from finance chief in November, and Lockheed CEO Marillyn Hewson, who has been in that position since January, 2013.
Officials at United Technologies and Lockheed declined comment.
Textron Inc. had submitted a bid for Sikorsky, but dropped out of the bidding after the price rose, according to several sources familiar with the matter.
Pentagon officials last week said they would carefully evaluate any sale of Sikorsky Aircraft, the U.S. military’s largest helicopter supplier, and it was important to the department to maintain competition and avoid market distortions.
The U.S. Defence Department can object to a merger involving its key suppliers during a federal antitrust review, which in this case could be led by the U.S. Justice Department.
Industry executives do not expect the Pentagon to block the deal, since Lockheed does not build helicopters, but said officials could ask for certain written assurances given the increased scale of Lockheed, which already posted more than $45-billion in revenues in 2014.
Combined with Sikorsky, Lockheed will dwarf the defence businesses of its nearest competitors, Boeing Co. and Northrop Grumman Corp., although the company is seeking to shed some of its lower-margin services businesses, sources said.