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United Technologies Will Jettison Its Sikorsky Helicopter Unit

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United Technologies Will Jettison Its Sikorsky Helicopter Unit

United Technologies Corporation (NYSE: UTX) confirmed plans Monday to sell or spin off its Sikorsky Aircraft Corp. unit, which makes the Black Hawk and other helicopters.

The Hartford-based industrial conglomerate, which also cut its earnings outlook Monday, had been reviewing options since March for Sikorsky.

The helicopter unit has seen recently weakened demand from the oil and gas industry, and last year posted sales of $7.5 billion, or about 11 percent of its parent company's total revenue.

'In Dialogue'

Boeing Co (NYSE: BA) said Monday that it is "in dialogue" about a possible acquisition of Sikorsky, according to a Jane's Defense Weekly report.

Other options according to previous speculation include a sale to Lockheed Martin Corporation (NYSE: LMT) or selling a minority stake to Textron Inc. (NYSE: TXT) that may provide a favorable tax treatment in a so-called Reverse Morris Trust, Reuters reported last week.

Airbus Grp Unsp ADR (OTC: EADSY) has also been mentioned as a potential buyer, but a tax-free spin-off of Sikorsky remains the most likely outcome, according to the Reuters report, which cited informed sources.

Related Link: Welcome The Rise Of Helicopters

Sikorsky said earlier this month it would cut 1,400 jobs, or more than 9 percent of its staff, because of lower helicopter demand from the energy sector.

United Technologies posted total sales last year of about $65.1 billion and employed about 211,500 people. The company's other units include Otis elevators, Pratt & Whitney jet engines as well as Carrier air conditioners.

Earnings Forecast Cut

The company on Monday also cut its 2015 earnings forecast more than 4 percent to between $6.55 and $6.85 a share.

The lower outlook includes one-time separations costs of between $0.10 and $0.20 a share, as well as a $0.10 decline in Sikorsky's operational expectations for the year due to weak helicopter demand from the oil and gas industry.

Excluding Sikorsky, United Technologies now expects expects 2015 earnings of between $6.35 and $6.55 a share, on sales of $58 billion to $59 billion.

With the Dow Jones Industrial average off nearly 1 percent Monday morning, United Technologies traded recently at $114.96, down 2.2 percent. Boeing and Lockheed are both off about 0.7 percent, while Airbus fell more than 2 percent.

 

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