Sikorsky to be sold to Lockheed Martin

[jtoatoktoe]

Ads even more technology into the Lockheed family.

http://www.reuters.com/article/2015/07/19/us-sikorsky-m-a-lockheed-idUSKCN0PT0MM20150719

[thewood1]

It was about the only place that could buy it. Bae was probably the only other one and that would have had a hard time getting through congress.

Even then, there will be all kinds of FTC and congressional reviews that cold scuttle it.

[thewood1]

I was just in the plant of a Sikorsky supplier in CT and the thought LM was the only answer.

[hellfish6]

I'm not in favor of consolidation among defense companies. When they started merging with serious vigor in the '90s is about the time that they started becoming wildly more costly (for far fewer returns).

[thewood1]

The main issue is when the DOD budgets start getting cut, consolidation is the only way to survive until budgets grow. They are competing with government subsidized mega-companies overseas as well. Consolidation is again the main response to that.

[charlee22009]

Isn't it a little late for DOD antitrust concerns...

[thewood1]

No. There is a limit. In fact, there used to be a specific law on market sizing related to bidding. That is why Textron pulled out of the bidding.

[Brent119]

Still seems strange to think of the Blackhawks as a Lockheed product. We really are down to three big mega-contractors in the U.S. Pardon me if I'm a little nostalgic.

[thewood1]

The same consolidation happened before...Curtis or Douglas anyone?

It ebbs and flows. McDonnell sprang up as a paradigm came about in the mid-40s. It happens and then unhappens over 20-30 year cycles.

[Zaslon]

Very Bad news for the free market.
Anti-trust law didn't stop the deal?

[thewood1]

There was no consolidation in helicopter. As far as the FTC is concerned, it is just switching owners. Same number of producers in the market.

[thewood1]

Not sure I understand the free market concern. Same number of manufacturers will exist. LM owning them doesn't seem to be much different than UT owning them.

[Brent119]

Compared to the "merger" of Boeing and McDonnell Douglas, this is small potatoes. Still doesn't feel quite right, but I understand it's part of the business of buying and trading business.

The longer term question is: will Lockheed try to relocate Sikorsky to a lower-cost market? Connecticut isn't cheap. What's their incentive to stay?

[thewood1]

CT gives them HUGE tax breaks. And they have a very strong congressional delegation. I am not sure it would be worth it to piss CT off.

[Cheechako]

ORIGINAL: Zaslon

Very Bad news for the free market.
Anti-trust law didn't stop the deal?

Why would it? LM wasn't an existing helo manufacture unlike Bell or Boeing.

[Zaslon]

My point is a consolidation in defense industry. UT isn't mega-corporation like Boeing or Lockheed-Martin.
With this acquisition now we have 2 mega-corporations acting like a duopoly with a minor sister (Northrop-Grumman) and some minor actors UT, BaE...

The 'merge' between Boeing and McDonnell-Douglas was an epic fail.[:(]

[thewood1]

UT is a HUGE company and does a LOT of defense work...Pratt & Whitney, Hamilton, and even Goodrich is like 50% defense.

Not sure Boeing and MD was an epic fail. It probably didn't get everything expected out of it, but the option of MD failing was worse.

[Zaslon]

Yeap, UT is in the same level than Boeing (total assets and employees), but the key is that UT is more diversified. Engines, A/C, lifts...

McDonnell-Douglas was gone. That's the problem (yeah I love his aircrafts). Without the merge, MD could be reestructured and again surely they would obtain green numbers again. But this is a What if...[:)]

[thewood1]

They would have restructured out of business. There commercial business was failing. They had no new DoD contracts. They would have chaptered 11 and been sold off as pieces.

As DoD contracts become more complicated and expensive, only the large survive until a new technology comes along to allow a smaller company entry.

I will also point out the all of UT's military business is actually on the block. Sk is only the start because it has no existing contracts.