Lockheed to buy Sikorsky for over $8 bn: report

US defence contractor Lockheed Martin has agreed to buy United Technologies Corp's (UTC) Black Hawk helicopter maker Sikorsky Aircraft for over $8 billion, Reuters yesterday reported, citing a source familiar with the talks.

The two companies intend to announce the deal on Monday, the report said.

The acquisition would be the biggest by Lockheed since its $10-billion purchase of Martin Marietta in 1995, and would also be the biggest aerospace purchase after the 2012 acquisition of Goodrich by UTC for more than $16 billion.

UTC, the Connecticut-based aerospace and industrial giant, had last month said that after conducting a strategic review, it has decided to either spin off or sell Sikorsky.

"Our strategic review has confirmed that exiting the helicopter business is the best path forward for United Technologies," Gregory Hayes, UTC president and CEO had then said. "Sikorsky is the world's premier helicopter company and through a series of strategic wins is well positioned for long-term growth.''

"However, separation of Sikorsky from the portfolio will allow both United Technologies and Sikorsky to better focus on their core businesses. Over the coming weeks, we'll determine whether a spinoff or direct sale is the best way to enhance Sikorsky's long-term success and create the most value for customers and shareholders," he had added.

UTC's decision to sell Sikorsky comes amid demand for helicopters weakens due to falling oil prices that have led to cost cutting in the oil and gas industry, as well as the US government scaling down defence budget.

A deal with Sikorsky would see Lockheed further strengthening its position as the world's largest defence contractor, but would face intense scrutinized by the US Defense Department and anti-trust regulators, whose aim would be to maintain competition among defence contractors.

Founded in Long Island, New York by Russian immigrant aircraft designer Igor Sikorsky in 1925, Sikorsky is the leading manufacturer of military and commercial helicopters.

Sikorsky helicopters are used by all branches of the US armed forces, along with military services and commercial operators in 40 nations.

Core US military production programmes are based on the Sikorsky H-60 aircraft, the Black Hawk helicopter for the US Army and Seahawk helicopter for the US Navy and has also been making helicopters for the US President in collaboration with Lockheed.

Over the past five years, the Pentagon has awarded $18 billion for Sikorsky helicopters, parts and services, making the company the leading rotorcraft provider to the US defence.

The Stratford, Connecticut–based company has more than 15,000 employees and posted sales of $7.5 billion last year.

Sikorsky has a joint venture in India with Tata Advanced Systems for producing S-92 helicopter cabins and more than 5,000 aerospace components at two manufacturing facilities in Hyderabad.