Lockheed Martin to buy Sikorsky Aircraft

United Technologies Corp. officially announced Monday morning that it has reached an agreement to sell Stratford-based Sikorsky Aircraft to Lockheed Martin Corp. for billion in cash.

The acquisition of Sikorsky Aircraft by Lockheed Martin will cost LMT $7.1 billion after tax benefits kick in.

For Lockheed Martin, the acquisition gives the company a foothold in the helicopter market, something that is missing from its diverse defence portfolio.

“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”, he said in a statement. The company expects the acquisition to be completed by late fourth quarter of fiscal 2015 (4QFY15) or the first quarter of fiscal 2016 (1QFY16). The company said earlier this year that it planned to shed Sikorsky, either through a sale or spinoff.

Some analysts opine that the USA regulators may approve the deal since Lockheed does not make helicopters itself and plans to align Sikorsky under the Lockheed Martin Mission Systems and Training (MST) business segment. Instead, the sale brings Lockheed Martin – which already manufactures many fixed-wing aircraft such as the F-35 Joint Strike Fighter and the KC-130 Super Hercules tanker – deeper into the aviation business.

In 2014, the civilian sales represented only 28% of the US$7.5 billion in sales.

It is said that the deal will prove to be profitable for Lockheed the defense business of Boeing Co and Northrop Grumman Corp.

In the news release announcing the deal, Lockheed also said it will conduct a strategic review of its government information technology and technical services businesses.

“We’ve been moving ahead with the restructuring plan, but that’s completely independent of the announcement” by Lockheed that it’s acquiring Sikorsky, said Paul Jackson, a Sikorsky spokesman. That business unit has facilities in Moorestown, among other sites.

Sikorsky builds the Black Hawk and the presidential Marine One helicopters, the Stallion family of U.S. Marine Corps helicopters, and rotorcraft used to ferry workers to offshore oil platforms.

If the sale is approved by regulators, the helicopter maker would move out of its Connecticut-based ownership for the first time since 1929, four years after it was founded.

Textron, the parent company of Bell Helicopter, had previously bid for Sikorsky, which United Technologies which bought in 1929, but subsequently pulled out of the bidding process.