By Doug Cameron
The head of Lockheed Martin Corp. on Wednesday declined to
comment on whether the company was interested in buying all or part
of Sikorsky Aircraft Corp., but said the company had the financial
capacity for large deals.
Lockheed Martin is among those exploring bids for the maker of
the Black Hawk helicopter, The Wall Street Journal reported earlier
this month, but such a move would mark a strategic shift, as the
world's largest defense company has to date focused on providing
systems for rotorcraft rather than manufacturing and assembly.
Boeing Co, which has also been linked to interest in Sikorsky, a
unit of United Technologies Corp., played down its potential
interest in a move that would combine the Pentagon's two largest
helicopter makers.
United Technologies announced plans earlier this year to explore
strategic alternatives for Sikorsky and aims to complete a review
in the summer. A spinoff is viewed as the most-likely option
because of a large historical tax liability that would likely be
triggered by any sale.
Sikorsky had sales of $7.5 billion last year and could fetch $10
billion in a full sale, according to people familiar with the
review.
"I'm not going to speculate about what we're going to do," said
Lockheed Martin Chief Executive Marillyn Hewson, when asked about
Sikorsky at an industry conference in New York.
Lockheed spent around $900 million on a series of small
acquisitions last year, but Ms. Hewson on Wednesday didn't rule out
larger deals if opportunities arose. "We have great debt capacity,"
she said, adding the company remains committed to returning most of
its free cash to shareholders over the next three years.
Lockheed is already a partner with Sikorsky on programs
including a planned new rescue helicopter for the Air Force and the
replacement for the rotorcraft used as Marine One by the U.S.
president. Lockheed has in the past focused on providing electronic
systems rather than building helicopter platforms.
Boeing President and Chief Operating Officer Dennis Muilenburg
later on Wednesday declined to comment on the potential fit with
Sikorsky when asked about its interest at the same investor
event.
He said Boeing was focused on organic growth for its defense
business, and expected any merger or acquisition activity to be
limited to bolt-on purchases that "fill out the gaps in our organic
strategy."
Boeing, which makes the Apache and Chinook helicopters for the
Pentagon and overseas customers, is also joined with with Sikorsky
in developing a new family of rotorcraft for the Pentagon.
Airbus Group NV, which owns the world's largest helicopter maker
by revenue, is also among the companies exploring bids for Sikorsky
or, alternatively, for a minority stake.
Analysts said the Pentagon would likely have reservations about
any consolidation of its primary helicopter suppliers, which also
include the Bell unit of Textron Inc.
--Jon Ostrower contributed to this article.
Write to Doug Cameron at doug.cameron@wsj.com
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