Lockheed to buy United Tech s Sikorsky for over $8 billion

With a deal, Lockheed would add the largest maker of military helicopters to a lineup that includes warplanes and missiles, as United Technologies opts for the sale over a possible spinoff to shareholders.

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.

Over the past five years, the Pentagon has awarded $18 billion for Sikorsky helicopters, parts and services, making the company the leading rotorcraft provider to the U.S. defence.

This is expected to make Lockheed less reliant on the fighter jet business – and focus its attention on helicopters, specifically the black hawk, which Sikorsky now makes.

According to Reuters, the Defense Department can object to a merger involving its key suppliers during a federal antitrust review, which in this case could be led by the Justice Department.

A deal with Sikorsky would see Lockheed further strengthening its position as the world’s largest defence contractor, but would face intense scrutinized by the US Defense Department and anti-trust regulators, whose aim would be to maintain competition among defence contractors.

United Technologies said in March that it would explore alternatives for Sikorsky, which accounted for $7.5 billion in sales a year ago out of total UTC revenues of $65 billion. In June, the unit announced 1,400 job cuts and said it would consolidate facilities.

Lockheed Martin and Sikorsky Aircraft have already cooperated in several projects, primarily the naval Anti Submarine and Surface Warfare (ASuW) MH-60R program for the US Navy.