Lockheed Martin prepares to acquire Sikorsky

More recently, Sikorsky revenues fell following weaker demand from the oil and gas sector, with the company providing helicopters for the offshore oil and gas industries.

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.

Lockheed Martin plans to align Stratford, Connecticut-based Sikorsky under its mission systems and training (MST) business segment.

‘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’s chairman, president and CEO.

A multi-billion dollar deal involving Sikorsky Aircraft could be announced on Monday.

Sikorsky and Lockheed Martin are working together on a number of projects that include Presidential helicopter and servicing contract of H-60 helicopters for the U.S. Navy. Lockheed said those parts of its business employ 17,000 people and earn roughly $6 billion in annual sales – much of it coming from federal agencies outside the military and intelligence communities.

Cutting ties to Sikorsky will let the company focus on divisions making jet engines, air conditioners and elevators while exiting the very different business of supplying rotary-wing aircraft to the USA and foreign armed forces.

Cowen and Co. analyst Cai von Rumohr wrote that the proposed sale may be a “longer-term strategic plus” for United Technologies and would improve its position in aerospace systems where it could cut costs.

Lockheed Martin has signed a definitive agreement to acquire Sikorsky Aircraft from United Technologies (UTC) for $9bn.

Lockheed will fund the transaction with a combination of new debt and available cash, as reported by a slide presentation during the company’s Monday morning webcast announcing the acquisition.

The companies said, however, that the actual price would be $7.1 billion at closing in late 2015 or early 2016 once tax advantages from the deal were taken into account.

United Technologies plans to use the money from the deal on a stock repurchase program, reports The Wall Street Journal.

Aircraft technicians assemble S-92A helicopters at Sikorsky Global Helicopters in Coatesville, Pennsylvania October 16, 2014.

Sikorsky through a spokesman declined comment. Both the companies did not make any official comment about the matter.

The deal is expected to close by the end of 2015 or the beginning of 2016.