United Technologies weighs sale of Sikorsky copter business

Sikorsky makes the Marine One helicopters, which carry President Barack Obama to and from the White House in Washington.
Sikorsky makes the Marine One helicopters, which carry President Barack Obama to and from the White House in Washington. AP

United Technologies plans to unload Sikorsky Aircraft, the 90-year-old maker of the iconic Black Hawk military helicopter and the rotorcraft that carry U.S. presidents.

The unit, which had $7.5 billion in sales last year, will be spun off if United Technologies can’t find a buyer, Chief Executive Officer Gregory Hayes said Wednesday. He said the decision followed a portfolio review that began after his appointment to the top post in November.

“As we looked at the business around Sikorsky, we became convinced internally that while Sikorsky is a great helicopter company, it probably didn’t fit in the UTC portfolio,” Hayes said in a conference call with reporters.

The decision “shouts action and change,” Nigel Coe, a Morgan Stanley analyst in New York, said in a note on Thursday. “Sikorsky, as an assembler of original equipment airframes, does not fit into UTX’s core competency as a systems supplier.”

Boeing, maker of the Chinook, or Textron, the parent of Fort Worth-based Bell Helicopter, could be interested in buying Sikorsky, Reuters reported, citing a recent report by RBC Capital Markets. Defense companies Northrop Grumman and Lockheed Martin could also be logical buyers, analysts said.

“We figure the major defense contractors will consider the transactions, regardless of their current participation in the helicopter business, including international buyers,” Howard Rubel, a Jefferies & Co. analyst in New York said in a note. “Private equity may consider it too.”

Sikorsky, which generates about two-thirds of its sales from U.S. defense contracts, is the only disposition under study “right now,” Hayes said. United Technologies said it’s conducting a strategic review of the helicopter business to consider options and expects the assessment to be finished this year. JPMorgan Chase & Co. is advising, Hayes said.

Founded in 1925 by inventor Igor Sikorsky, the unit has supplied Black Hawks to more than two dozen governments around the world. Sikorsky also won a contract last year to build as many as 21 VIP helicopters for the U.S. president and other officials from the executive branch. It is based in Stratford, Conn., where it has its largest plant and about 8,000 employees.

Analysts have been speculating since the CEO change about the possible divestiture of Sikorsky, a point reinforced when Hayes told analysts in December that he had no plans to sell the unit while saying “anything’s for sale at the right price.”

He drew a distinction Wednesday between helicopter manufacturing and United Technologies’ other operations, which make systems for aircraft and buildings. Sikorsky has a fundamentally different business model, as well as lower growth and margin potential, Hayes said.

This article includes material from the Hartford Courant.