American defence giant Lockheed Martin will acquire the maker of iconic Black Hawk helicopters Sikorsky in deal worth more than $8bn.
The acquisition will be the second biggest in Lockheed’s history after the 1995 $10bn acquisition of Martin Marietta.
By purchasing Sikorsky, Lockheed Martin, which makes everything from satellites to aircraft and naval equipment, will become less reliant on sales of its F-35 fighter jets.
With annual revenues of $45bn, Lockheed is the US number one defence company ahead of Boeing and Northrop Grumman.
According to Reuters, the acquisition will be officially announced on Monday before the firm releases its second quarter results on Tuesday.
Textron, parent of Bell Helicopter, was originally in the running to buy Sikorsky but withdrew after the price increased, said Reuters, citing sources familiar with the situation. Both helicopter makers have seen revenues drop due to lower demand from the oil and gas sector.
Pentagon officials last week said they would carefully evaluate any sale of Sikorsky, saying it was important to the department to maintain competition and avoid market distortions.
The US Defense Department can object to a merger involving its key suppliers during a federal anti-trust review, which in this case could be led by the US Justice Department.
Industry executives do not expect anti-trust objections since Lockheed does not build helicopters, but said US officials could ask for certain written assurances given Lockheed's expanded scale.
"It's a big deal, but it doesn't concentrate markets any further than they already were," said Virginia-based defence consultant Loren Thompson. "There's no real overlap between the fighter market and the rotorcraft market. They're discrete markets with different customers and users."
Lockheed and Sikorsky already work together on several major helicopter programs, including the presidential helicopter, a combat rescue helicopter and the MH-60R and S-model helicopters built for the Navy and Marine Corps.
Sikorsky's strong foreign sales would help Lockheed expand its international footprint, said Richard Aboulafia, aerospace analyst with the Virginia-based Teal Group.
"It's a great business for them to own. In addition to the F-35 and the C-130J, Sikorsky is another great brand for them to underpin their defense strategy," he said.
Lockheed is keen to preserve the Sikorsky brand, the sources said, which means the company may well allow Sikorsky to continue functioning as a standalone business instead of integrating it into its already huge Aeronautics division, which had revenues of over $14bn last year.
Other big aerospace companies, including Italy's Finmeccanica SpA, Europe's Airbus and Textron Inc, allow their helicopter businesses to operate as separate units.