Sikorsky acquired by Lockheed Martin
NewsJuly 20, 2015
BETHESDA, Md. Lockheed Martin officials say the company is now in a definitive agreement to buy Sikorsky Aircraft, known for producing military and commercial helicopters, for $9.0 billion.
The price has been effectively dropped to about $7.1 billion, after taking into account tax benefits resulting from the transaction.
“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies,” says Marillyn Hewson, chairman, president, and CEO of Lockheed Martin. “I’m confident this acquisition will help us extend our core business into the growing areas of helicopter production and sustainment. Together, we’ll offer a strong portfolio of helicopter solutions to our global customers and accelerate the pace of innovation and new technology development.”
The acquisition is subject to customary conditions, including securing regulatory approvals, and officials expect it to close by the end of this year or early next year.
The transaction will have no impact on the company’s previously stated commitments to return cash to shareholders through dividends and to reduce outstanding share count to below 300 million shares by the end of 2017.
The election generates a tax benefit with an estimated present value of $1.9 billion for Lockheed Martin and its shareholders, according to a Lockheed Martin release.
Company officials say they plan to place Sikorsky under the Lockheed Martin Mission Systems and Training (MST) business segment. MST and Sikorsky already partner on various programs, such as the VH-92 Presidential Helicopter, Combat Rescue Helicopter, and the Naval MH-60 Helicopter.
Separately, Lockheed Martin officials will perform a strategic review of alternatives for its government IT and technical services businesses, primarily in the Information Systems & Global Solutions business segment and a portion of the Missiles and Fire Control business segment. The programs to be reviewed represent about $6 billion in estimated 2015 annual sales and more than 17,000 employees.
Following recent shifts in market dynamics, Lockheed Martin officials say the company needs to determine whether the businesses can grow. The strategic review is expected to result in a spin-off to Lockheed Martin shareholders or sale of these components.
The IS&GS programs that are not included in the strategic review are mostly in the defense and intelligence arena and will be realigned into Lockheed Martin’s other four business segments following completion of the review.
For more information on this acquisition, visit www.lockheedmartin.com/sikorsky.
