Lockheed Martin has entered into an agreement to acquire Sikorsky Helicopters for US $9 billion with $1.9 billion in account tax benefits.
The price is effectively reduced to approximately $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,” said Marillyn Hewson, Lockheed Martin chairman, president and CEO said in a statement Monday.
“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,” he said.
The acquisition is subject to customary conditions, including securing regulatory approvals, and is expected to close by late fourth quarter 2015 or early first quarter 2016. 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.
Lockheed Martin and United Technologies Corporation have agreed to make a joint election under Section 338(h)(10) of the Internal Revenue Code, which treats the transaction as an asset purchase for tax purposes. The election generates a tax benefit with an estimated present value of $1.9 billion for Lockheed Martin and its shareholders.
The Corporation plans to align Sikorsky under the Lockheed Martin Mission Systems and Training (MST) business segment. MST and Stratford, Conn., based Sikorsky currently partner on a number of critical programs, including the VH-92 Presidential Helicopter, Combat Rescue Helicopter and the Naval MH-60 Helicopter.
UTC earlier this month had announced that it would either sell or spin off Sikorsky, despite company winning two design competitions last year to produce helicopters for the White House and the US Air Force.
Sikorsky announced on June 2 that it would cut 1,400 positions globally over the next year, including 180 in Connecticut. The company also announced it would close its Bridgeport facility on South Avenue, bringing those several hundred jobs to its Stratford headquarters starting next year.
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 US Navy.
Apart from Lockheed Martin, Textron had also shown interest in purchasing Sikorsky.
Sikorsky Aircraft Corp has won a contract from the US to provide UH-60M helicopter to Jordan. The company announced Thursday that the work will be performed in Stratford, Connecticut with an estimated completion date of Dec
Lockheed Martin, Textron are major contenders to have offered to buy Sikorsky Aircraft. The Stratford-based helicopter manufacturer could be valued at $8 billion and the decision for the sell-out is likely by the end of this month
Sikorsky Aircraft announced Friday that it has delivered six CH-148 Cyclone helicopters to the Canadian government during an acceptance celebration. The six helicopters represent the first of 28 Cyclone aircraft that Sikorsky will deliver to the Canadian Armed Forces to perform a full range of anti-submarine and anti-surface warfare, search and rescue, and utility missions in various environments
Sikorsky Aircraft has won a $38.8 million contract from the US department of Defense for procuring critical parts and associated support for two CH-53K system demonstration test article aircraft
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