Lockheed buys Sikorsky

When it was selling Sikorsky, United Technology said it was looking to make $4 billion. Lockheed Martin’s acquisition at $9 billion (which works out as $6.2 billion in cash) is a fantastic result.

On a conference call, Marillyn Hewson, chairman, president and CEO of Lockheed Martin, said that the price they paid reflected low oil prices. She said: “We believe these current pressures enable us to make this acquisition at a low point in the economic cycle. All of these elements indicate significant opportunities for growth in the future and value creation potential.”

Lockheed Martin was clearly most attracted by Sikorsky’s military business. “I’d like to think of this as having sort of a power and backing of a $45 million business focused on government contracting versus one which was less focused perhaps in total than just on the piece of the Sikorsky business,” said Bruce Tanner, EVP and CFO.

But, the new owners have also stressed the importance of the commercial helicopters business. “It’s predominantly in the oil and gas side which is not an area that we are in,” said Hewson. “And while we’ve got some near-term pressure there just because of what’s happened with oil prices, we see an opportunity in a few years for that to turn and so real opportunity for growth there as we move forward.”

Lockheed are hoping to make costs savings of $150 million each year, although most of these are likely to come from military helicopters.

Alasdair Whyte

Alasdair launched Corporate Jet Investor and Helicopter Investor in 2010. He has more than 15 year's experience as a financial journalist and has specialised in aviation for much of this time. As well as editing the website, Alasdair helps to organise our international conferences and events. He also regularly chairs them as well as other industry gatherings.

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