Lockheed Buys Sikorsky,May Divest Some Businesses

Lockheed Martin,the world's largest defence contractor,announced today,20 July,that it has entered into a definitive agreement to acquire Sikorsky Aircraft from United Technologies for 9 billion dollars.After a tax break,Lockheed said the final cost would be 7.1 billion.*
Sikorsky is a natural fit for Lockheed Martin and complements our broad portfolio of world-class aerospace and defence technologies,said CEO Marilyn Hewson.I'm confident this acquisition will help us extend our core business into the growing areas of helicopter production and sustainment.Together,we'll offer a strong portfolio of helicopter solutions to our global customers and accelerate the pace of innovation and new technology development.*
Pending regulatory approval,the deal is expected to close by late Q4 2015 or early Q1 2016.Despite the acquisition,Lockheed will continue on course to pay dividends and buy back shares.*
Sikorsky will become part of Lockheed's Mission Systems and Training segment.Through MST,Lockheed and Sikorsky are already partners on the VH-92 Presidential Helicopter,Combat Rescue Helicopter and Naval MH-60 Helicopter.*
Lockheed is also exploring the option of spinning off or selling its government IT and technology services businesses,which comprise about 6 billion of its estimated 2015 annual sales.As global security market dynamics shift,this review will strengthen our competitive posture,enabling sustained,profitable growth and positioning Lockheed Martin to deliver value for customers,shareholders and employees,Ms.Hewson added.*
Certain defence and intelligence programmes in the Information Systems&Global Solutions segment will not be included in the review.*
Lockheed Martin (LMT),United Technologies (UTX)

Will Airbus Buy Sikorsky?

If United Technologies decides to sell its Sikorsky Aircraft subsidiary in a few months,one of the bidders could be Airbus,Reuters reported today.The CEO of Airbus Group,Allan McArtor,said we are interested to see what UT does with Sikorsky.Airbus is interested in acquiring anything in the areas of defence,space,helicopters,cyber security and 3D manufacturing,Mr.McArtor noted.Sikorsky is valued at 8 billion dollars.
Other possible bidders for the helicopter specialist could include Lockheed Martin,which is already collaborating with Sikorsky on its VH-92 Marine One presidential helicopters,and General Dynamics,which manufactures the Gulfstream line of business jets.Indeed,both Lockheed Martin and Boeing have already voiced their interest in a Sikorsky sale.
Airbus is currently manufacturing helicopters in its Airbus Helicopter division,as well as developing,marketing and selling both civilian and military helicopters.Airbus operates as Airbus Commercial and Airbus Space and Defence,producing commercial jet aircraft,military transport aircraft and special mission aircraft,commercial space launch vehicles,satellites,defence systems and electronics and related services.The France-based company was formerly known as European Aeronautic Defence and Space Company NV,or EADS.*
Airbus Group SE (AIR.PA),Lockheed Martin (LMT),General Dynamics (GD),United Technologies,Boeing (BA)

Market Outlook and Potential Winners and Losers

We've seen lots of strange moves in the market,said Savita Subramanian,Head of US Equities and Quantitative Strategy at Bank of America/Merrill Lynch Global Research,and I think that quality,such as the S&P 500,is going to continue to be important.I actually think that rates are going to move a little higher.Utilities are probably one of the worst places to be with rising rats.Global growth could be a little bit better because of lower oil prices.I do think the trend of the market will be higher,with a target of 2200 on the S&P.
One thing I'm a little worried about is the REITs,because they're interest rate plays.I wouldn't buy oil there.Our team thinks it could go down to 30,but it's getting close to a bottom.*
GoPro scored a double beat in Q4,with earnings per share of 0.99 versus an estimate of 0.70,while revenue was at 634 million versus the 580 million estimate.The video camera company is taking its first steps into China,so has a lot of growth potential still ahead of it.*
United Technologies' Sikorsky subsidiary and Lockheed Martin have been awarded a 1.24 billion contract for the first 6 of 23 new Marine One helicopters,which are used to transport the President and other dignitaries.*
iShares Core S&P 500 ETF(IVV),GoPro Inc(GPRO),United Technologies(UTX),Lockheed Martin(LMT)