Lockheed Martin confirmed on Monday that it will acquire Sikorsky Aircraft, the maker of Black Hawk helicopters, from United Technologies Corporation for $9 billion in cash.
Lockheed, the world’s biggest military contractor, will add a strong line of new business to its portfolio. The Blackhawk helicopters are among the most favorited among US military forces. The helicopters will add to Lockheed’s current portfolio which includes the F-35 fighter jet.
According to the defense contractor, the deal will include a tax benefit of about $1.9 billion for Lockheed Martin and its shareholders, effectively reducing the purchase price to $7.1 billion.
The Sikorsky Aircraft business reported net sales of $7.5 billion in 2014. The company currently employees 15,000 workers, mostly in the Stratford, Connecticut area.
“Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies,” Marillyn Hewson, Lockheed Martin chairwoman, president, and chief executive, said in a news release. “Together, we’ll offer a strong portfolio of helicopter solutions to our global customers and accelerate the pace of innovation and new technology development.”
The acquisition is Lockheed Martin’s largest since its $10 billion purchase of Martin Marietta 21 years ago.
In June, United Technologies said that it was considering selling or spinning off the business in 2015. That same month, Sikorsky said that it planned to cut up to 1,400 jobs, or about 9 percent of its workforce.
Based in Hartford, United Technologies posted net sales of $65.1 billion and had more than 211,000 employees in 2014.
In addition to Black Hawks, Sikorsky makes a range of commercial and military helicopters, including the S-76 and the S-92 commercial helicopters and the Seahawk for the military.
Last year, Sikorsky won the contract to build the next generation of Marine One helicopters, which are used to transport the president.
Lockheed Martin is widely known for its manufacturing of military and aerospace equipment, including jet fighters, ships, tactical vehicles, missiles and satellites. It posted net sales of $45.6 billion in 2014 and about 112,000 employees.
The deal is subject to regulatory approval and is expected to close by late fourth quarter 2015 or early first quarter 2016.
The US Department of Defense will likely scrutinize the merger. The department has said repeatedly in recent years that it has a problem with the consolidation of defense contractors which reduces competition and ultimately leads to higher prices for U.S. taxpayers.