Sikorsky solgt til LM for 9 milliarder dollar - Cash

Lockheed Martin Buying Sikorsky for $9B in Cash

Lockheed Martin announced this morning that it inked an agreement to buy helicopter maker Sikorsky Aircraft from United Technologies Corp. (UTC) for $9 billion in cash. The deal is subject to potential vetoes from both the U.S. Defense and Justice departments, but is expected to receive regulatory approval. The acquisition is expected to close late in the fourth quarter or early first quarter of 2016. UTC had been publicly shopping Sikorsky since at least February, and the Lockheed-Sikorsky deal had been telegraphed for weeks. The deal would be Lockheed’s largest acquisition since it merged with Martin Marietta in a $10 billion stock swap in 1995.  Last year, UTC reported revenues of $65 billion, of which Sikorsky accounted for $7.5 billion. However, Sikorsky’s profits and sales had been dropping in recent months and in June the company announced that it would eliminate 1,400 jobs and consolidate some facilities. Sikorsky—which is based in Stratford, Conn., but operates additional production facilities in Pennsylvania and New York—has been part of UTC since the company was known as United Aircraft in 1929. Lockheed Martin spokesman Dan Nelson told AIN that “we intend to keep the entire Sikorksy business—military and commercial.” Sikorsky civil programs include the S-76D, S-92 and former Schweizer helicopters. Next for Sikorsky: What Stays, What Goes Expect Lockheed Martin to spend the next six months or so sorting out what needs to be fixed at Sikorsky Aircraft versus what needs to be sustained there. The $46-billion aerospace and defense company said today it has struck a deal to buy Sikorsky from United Technologies for $9 billion (higher than pundits’ valuation of $8 billion). The companies said the deal should close late this year or in early 2016, pending regulatory reviews.  Photo courtesy of U.S. Air Force Among those closely watching the takeover is the Pentagon. Sikorsky is its largest helicopter supplier (including the VH-3D presidential transport shown above and its VH-60N counterpart). The U.S. Defense Department has said it will monitor the transaction for aspects that might "eliminate competition or cause market distortions” or otherwise harm its interests. The two companies have very different business practices and management styles, those contrasts made clearer through years of teaming on helicopter programs such as the U.S. Navy’s MH-60R/S. The Pentagon also will have to assess the impact of the buyout on development of its new combat rescue and presidential helicopters (programs on which Sikorsky and Lockheed Martin also are teamed) and on the Joint Multi-Role Technology Demonstrator initiative. That effort aims to lay the foundation for a new, common family of joint vertical-lift aircraft. Sikorsky is teamed with Boeing on one bid for it, while Lockheed Martin is paired with Bell Helicopter on another. For its part, industry will be watching whether or not Lockheed Martin actually wants to be in the civil helicopter business. That company has its own helicopter pedigree, including its development of the rigid-rotor XH-51 and AH-56 Cheyenne. Sikorsky Sale vs. Spinoff? Simple Math The decision to sell Sikorsky Aircraft rather than spin it off as a standalone company came down to simple math, United Technologies Corp. President/CEO Gregory Hayes told financial analysts today. Talks about the manufacturer’s disposition had been underway for nearly a year before yesterday’s announcement of its sale to Lockheed Martin for $9 billion. Speculation was that UTC’s tax bill on gains from Sikorsky (which it has owned since the 1920s) would make a sale prohibitive. But Hayes said math argued against a spinoff, even it averted a big tax hit. UTC figured Sikorsky’s value at $600 million. Subtract from that $100 million for the cost of a standalone company’s IT, finance and administrative functions (which now are covered by UTC), Hayes said, and you’re left with a $500 million company. If a standalone Sikorsky’s stock traded at 10 times that value (which Hayes said is a standard market multiple for defense contractors), it would have market value of $5 billion. Add a possible market premium, and a spun-off Sikorsky’s price tag could be as high as $5.75 billion. But that value “wasn’t even certain,” Hayes said. UTC will clear $6 billion—after the tax bill is paid—if the L-M deal goes through. That combined with the fact that the L-M deal “is certain, it’s today, it’s cash made a lot more sense than the risk associated with a spinoff,” Hayes said. “We did the math and it came out to be pretty simple at the end.”