Wednesday, July 22, 2015

US Defense Giant Lockheed Martin Acquires Sikorsky

Lockheed Martin Corp. on Monday announced plans to acquire United Technologies Corp's Sikorsky helicopter unit for $9 billion. Sikorsky (currently owned by United Technologies) is best known for its iconic Black Hawk helicopters. The news, was first reported by Reuters on Sunday. 

The deal provides key foreign markets for Lockheed Martin and greater access to the highly lucrative military and commercial helicopter market. In June, The New York Times reported that United Technologies announced plans to shed its Sikorsky helicopter unit, which posted $7.5 billion in revenue for 2014 alone.

But the deal could meet significant challenge from the US Defense Department, which has aimed to maintain a healthy competition in the defense market. Lockheed Martin is currently the Pentagon's largest arms supplier and one of the biggest in the world. It manufactured a slew of military aircraft like the F-16 and F-35. It also develops intelligence systems, aerospace technologies and smart weapons for the US military. 



If approved, Sikorsky will be moved under Lockheed Martin's Mission Systems and Training business. The deal is expected to close in the first quarter of 2016. The company said the net cost of the deal was around $7.1 billion, taking into tax benefits related to the big purchase. 

Headquartered in Bethesda, Maryland, Lockheed Martin is a US-based aerospace, defense, security and advanced technology company. It employs 116,000 people worldwide and has an annual revenues of $45 billion. Lockheed Martin is the world's largest defense contractor based on revenue for fiscal year 2014. The company operates in five business areas: Aeronautics, Information systems & Global Solutions, Missiles and Fire Control, Mission Systems and Training, and Space Systems. Lockheed Martin develops the F-35 Lightning- the most expensive weapons system in history, with a price tag of nearly $400 billion. In addition, it also builds the F-16 Falcon and C-130 Hercules transport. Lockheed Martin is also investing into exploration of emerging technologies in the areas of nuclear energy, renewable energy and intelligent energy distribution.

Founded in 1925 by Igor Sikorsky and based  in Stratford, Connecticut, Sikorsky Aircraft Corporation is the world's largest military-helicopter builder. Its signature products include the iconic Black Hawk helicopter and a VIP helicopter that used to carry US presidents and other dignitaries. 

The two companies have been working for years, last year Lockheed teamed up with Sikorsky to win an US Air Force combat-rescue and presidential helicopter contracts. Sikorsky is Lockheed's biggest acquisition since it acquired Loral Corp's defense electronics business for $9.1 billion and its massive $10 billion merger with aerospace company Martin Marietta in 1994.

Image Credit: Whnt and Bloomberg

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