The Deal: United Technologies Contemplates Sikorsky Fate

NEW YORK (TheStreet) United Technologies Corporation (UTX) the industrial conglomerate that placed a big bet in 2012 on commercial aerospace, is reportedly seeking to scale back its defense exposure via a potential sale or spinoff of its Sikorsky helicopter unit.

Hartford, Conn.-based UTX has been actively working to reshape its portfolio, spending $18.4 billion in 2012 to acquire Goodrich and in the years since announcing a series of asset sales including its Hamilton Sundstrand division, Clipper Windpower and its electrical power systems business. The company's next move might be to sell Sikorsky, according to Defense News, with both a sale and a spinoff reportedly under consideration.

UTC, maker of Pratt & Whitney engines, Otis elevators, Carrier HVAC units and a range of building control and security products, declined comment on the report.

Sikorsky, maker of the Army's Black Hawk helicopters and other rotocraft, generates more than $6 billion in annual sales. But the unit, the largest supplier of helicopters to the U.S. defense industry, has hit a stumbling block in recent years as sales of rotocraft slowed and Pentagon replacement programs were put on hold.

The unit laid off about 400 salaried and hourly employees in 2013 in response to order cutbacks. Helicopter sales skyrocketed during U.S. military conflicts in Iraq and Afghanistan but are expected to slow as the Pentagon withdraws many of its resources in the region.

Thanks to its size, Sikorsky could make an attractive target for a European defense firm trying to increase its Pentagon exposure. Defense bankers said Monday that UTC would likely prefer to split off Sikorsky for tax purposes, saying that as a standalone, it could be worth at least $5 billion.

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