Lockheed Martin will buy Sikorsky Aircraft, the helicopter unit of United Technologies for $9 billion, and would review the possible sale or spinoff of $6 billion in other information technology and services businesses.
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The net cost of the Sikorsky deal was around $7.1 billion, taking into account tax benefits resulting from the transaction. Lockheed also reported higher earnings and revenue for the second quarter.
"Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defense products and technologies," Lockheed chief executive officer Marillyn Hewson said.
Lockheed Martin said the purchase would have no impact on its commitment to return cash to shareholders through dividends and to reduce outstanding share count to below 300 million shares by the end of 2017. said it repurchased 4.9 million shares for $937 million in the quarter, up from 0.8 million shares for $124 million in the year earlier period.
Lockheed Martin will align Sikorsky under its mission systems and training business, which had already worked closely with Sikorsky on several helicopter programs.
The company expects to close the transaction by late in the fourth quarter of this year, or early in 2016, depending on regulatory approvals. It said it would complete a strategic review of its government IT infrastructure services business and the technical services business within its missiles and fire control segment by the end of the year, units with about 17,000 employees.
The company will retain services businesses focused on defense and intelligence customers.
Proceeds from the sale of its copter unit would fund more United Technologies share buybacks to offset the earnings impact from the departure of Sikorsky. Its board authorized a share buyback of up to 75 million shares, which would be worth about $8.3 billion based on Friday's closing price, the company said. ■