Update | Lockheed to buy United Technologies’ Sikorsky helicopter unit for US$9 billion

Lockheed Martin said on Monday it would buy Sikorsky Aircraft, the helicopter unit of United Technologies, for US$9 billion, and would review the possible sale or spin-off of US$6 billion in other information technology and services businesses.

The Pentagon’s largest supplier said the net cost of the Sikorsky deal was around US$7.1 billion, taking into account tax benefits resulting from the transaction. Lockheed also reported higher earnings and revenue for the second quarter.

The deal, first reported by Reuters on Sunday, cements Lockheed’s dominance in weapons making and opens key foreign markets for the company, which has annual revenues of US$45 billion. It already dwarves its nearest competitors, the defence business of Boeing and Northrop Grumman.

It comes just months after UTC said it would explore alternatives for Sikorsky, which accounted for US$7.5 billion in sales last year out of total UTC revenues of US$65 billion.

This is Lockheed’s largest acquisition since it bought Martin Marietta Corp for about US$10 billion two decades ago. It marks the first major strategic move for both United Tech Chief Executive Officer Greg Hayes, who was elevated to CEO from finance chief in November, and Lockheed CEO Marillyn Hewson, who took her job in January 2013.

Lockheed shares were trading 1.3 per cent higher at US$203.76 around mid-morning on the New York Stock Exchange. United Technologies shares were trading about 0.64 lower at US$110.09.