US defense manufacturer Lockheed Martin is reportedly looking to purchase the Sikorsky Aircraft helicopters group from United Technologies Corp.
The deal itself would be worth at least $8bn according to an article in The Wall Street Journal. This same article also claims that a deal is possible “in the coming days”.
United Technologies Corp. had previously announced its intention to explore alternatives for Sikorsky including spinning it off to other companies.
Sikorsky Aircraft is a historic manufacturer of many of the helicopters used by the varied US defense arms. Its most well-known family of products are the Black Hawk transport helicopters, of which over 4,000 are currently in service.
As well as direct helicopter sales, Sikorsky also has an aftermarket part sales and repair service business, which generates further revenue.
The company, which has more than 15,000 employees, reported sales of $7.5bn and operating profits of $219 million in 2014.
While its business is not struggling, the division faces reduced sales in the coming years, following a reduction in the US military’s involvement in Afghanistan and Iraq.
Should the deal go ahead, it would be the largest acquisition by Lockheed Martin for two decades, since its $10bn acquisition of Martin Marietta Corp in 1995.
Lockheed Martin is already the world’s largest defense company, with a market cap of around $61bn at the time of writing.
Despite widespread reporting of the deal however, neither company involved has made any official comment on the matter, meaning that the purchase could still be taken off the table if negotiations sour.
Lockheed Martin as a ‘platform builder’
The reported future acquisition of Sikorsky Aircraft by Lockheed Martin would make sense in light of recent statements by the company regarding its business direction.
The company appears to be attempting to move towards building not just the weapons systems and communications equipment for military vehicles but also the vehicles themselves.
Such a pivot by the company would put it in better stead in the future to win lucrative defense contracts for new fighting systems.