Lockheed Martin Corporation, one of the biggest suppliers of military aircraft, naval ships, and satellites to the US government has recently purchased Sikorsky Aircraft Corporation – a company that manufactures Black Hawk helicopters for the US military. With this new acquisition, Lockheed Martin is taking on the responsibility to provide military helicopters for the Pentagon. The US Department of Defense (DoD), however, is frowning upon this enormous merger (reportedly worth $9 billion). Lockheed Martin is already leading the F-35 aircraft research and development efforts for the US military and now that they have merged with Sikorsky, the US DoD is worried the merger will, “lead to too much consolidation within the defense industry” – with Sikorsky, there are concerns Lockheed Martin can now “out muscle” the US military’s other prime contractors. In response to the US DoD, Lockheed Martin acknowledged the importance of maintaining a balance between an efficient and competitive industrial base, but they later disagreed how larger defense companies “reduce competition and inhibit innovation”. With this new merger, Lockheed Martin projects an increase of $7.5 billion in sales to to its already $45 billion (fiscal year 2014) in revenue, and that the Sikorsky acquisition will reward its shareholders with higher dividend returns – helping them better maintain their customer base and keep shareholders happy. Lockheed Martin already enjoys a dominant role within the US defense industry; with the Sikorsky acquisition, that position will only be even further solidified.
Sources
- Radelat, Ana. Pentagon slams Lockheed’s bid to purchase Sikorsky. N.p.: The CT Mirror, 2015. Web. 2 Oct. 2015.
- Stone, Mike, and Andrea Shalal. Exclusive: Lockheed Martin mulls merger of some services units with peer – sources. N.p.: Channel News Asia, 2015. Web. 2 Oct. 2015
- Surran, Carl. DoD warns against mergers following Lockheed-Sikorsky deal. N.p.: Seeking Alpha, 2015. Web. 2 Oct. 2015.
- Vallo, Michael. Lockheed Lands Sikorsky, Hikes Payout. N.p.: Barron’s, 2015. Web. 2 Oct. 2015.