Lockheed Martin Buying Helicopter Maker Sikorsky in $7.1B Deal

Lockheed Martin Corp., the world’s biggest defense contractor, is about to get even bigger after buying helicopter maker Sikorsky from United Technologies Corp. in a deal worth 7.1 billion after “taking into account tax benefits resulting from the transaction.”

It will be Lockheed’s biggest acquisition since 1995, when it merged with Martin Marietta in a deal valued at $10 billion.

For United Technologies, it’s the end of a 70-year relationship with the helicopter pioneer, maker of the iconic Black Hawk choppers used by the U.S. military (read more about the strategy of new CEO Greg Hayes here). It’s also a reaction to falling margins driven by cuts in the defense budget and, more seriously over the last year, a sharp drop in civil orders from the oil and gas industry. Oil companies have slashed investment spending in response to the 50% drop in oil prices since last summer.

Get The Brief. Sign up to receive the top stories you need to know right now.

Please enter a valid email address.

* The request timed out and you did not successfully sign up. Please attempt to sign up again.

Sign Up Now

An unexpected error has occurred with your sign up. Please try again later.

Check here if you would like to receive subscription offers and other promotions via email from TIME group companies.

You can unsubscribe at any time. By signing up you are agreeing to our Terms of Service and Privacy Policy.

Thank you!

For your security, we've sent a confirmation email to the address you entered. Click the link to confirm your subscription and begin receiving our newsletters. If you don't get the confirmation within 10 minutes, please check your spam folder.

Sikorsky had said in the spring that its first-quarter operating profit fell 11% on a 7% decline in sales. Operating margins fell to 3% last year from over 6% in 2013. The company has already announced plans to shrink the number of its facilities, cutting 1,400 jobs in the process.

The agencies reported that the deal isn’t likely to face too much pressure from antitrust authorities, as Lockheed doesn’t currently make helicopters itself, so the Department of Defense isn’t likely to suffer any reduction on competition for further contracts.

Reuters said that Textron Inc., the parent company of Bell Helicopter, had dropped out of the bidding for Sikorski due to price concerns. United had needed a high price because it faces a chunky tax bill, given that the value of Sikorsky has risen so much since United bought it.

Read next: This Is the Surprising Way the Iranian Military Responded to the Nuclear Deal

Download TIME’s mobile app for iOS to have your world explained wherever you go

Contact us at letters@time.com.