Maryland-based aerospace company Lockheed Martin on Monday said it had entered into a definitive agreement to buy Sikorsky Aircraft Corp. in Stratford for $9 billion.
In a simultaneously released statement, Sikorsky parent company United Technologies Corp. in Hartford said it was a cash sale. The news followed a month of hints that a deal was forthcoming.
“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,” UTC President and CEO Gregory Hayes said in a statement.
“Sikorsky’s acquisition by Lockheed Martin, one of the world’s leading aerospace and defense companies, will ensure it remains a technology leader at the forefront of vertical lift,” he said. “We are committed to working closely with Lockheed Martin to execute a seamless transition for customers and employees.”
UTC will discuss the deal at its previously scheduled conference call with investors and analysts at 8:30 a.m. Tuesday, following the release of its quarterly financial results. A corresponding presentation will be available prior to the call on the company’s website.
As rumors of a deal swirled last week, Stratford Mayor John Harkins voiced confidence Sikorsky planned to stay in the town.
According to Hearst Connecticut Media, a Lockheed spokesman said Sikorsky will keep its Stratford headquarters and Sikorsky name. Lockheed Chief Financial Officer Bruce Tanner said job cuts, facility consolidation and the elimination of overlapping costs are possible, Hearst reported.
Lockheed said the price “is effectively reduced to approximately $7.1 billion, after taking into account tax benefits resulting from the transaction.” The company said the IRS has classified the transaction as “an asset purchase for tax purposes,” resulting in $1.9 billion in savings.
“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 chairwoman, president and CEO. “I”™m confident this acquisition will help us extend our core business into the growing areas of helicopter production and sustainment.”
The acquisition is subject to customary conditions, Lockheed said in a statement, including securing regulatory approvals, and is expected to close late this year or early next year.
Sikorsky and Lockheed have partnered on a number of programs, including the VH-92 presidential helicopter, combat rescue helicopter and the Naval MH-60 helicopter.
David Cadden, professor emeritus in the School of Business at Quinnipiac University in Hamden, weighed in on the deal, saying, “It would appear that Lockheed Martin is actively committed to being in the defense industry. It has a proportion of sales coming from defense-related units that is far higher than Boeing or Northrop Grumman. Decades ago, Lockheed Martin lost a major helicopter contract with its highly advanced Cheyenne helicopter. This will be Lockheed Martin’s largest acquisition in two decades. One hopes that the new parent firm will not immediately seek major job relocations.”
