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Wednesday, June 10, 2015

UTC Board Weighs Sikorsky's Future

United Technologies Corp. is expected to update the financial community on its plans for the future of Sikorsky Aircraft on June 15 when it briefs analysts and investors at the Paris Air Show on its overall business activities.

UTC’s plans for the briefing, scheduled for broadcast live on www.utc.com at 9 a.m. Paris time on Monday, come after a week of reports about interest from other aerospace companies in Sikorsky, which makes fixed-wing transport and reconnaissance aircraft in addition to its famed line of helicopters.

The parent company’s board of directors is said to be meeting this week to review options for Sikorsky, which has been valued at $8 billion. UTC is widely considered to be weighing two options: a spin-off or a combination with a buyer structured as what is known as a Reverse Morris Trust to avoid a hefty tax bill. The tax bill would be related to UTC’s more than 85 years of gains on Sikorsky, which became part of the predecessor United Aircraft and Transport Corp. in mid-1929. Some reports have estimated the tax bill on a sale at $3 billion.

Textron has made an offer for Sikorsky, according the Reuters news service, which added that Boeing and Lockheed Martin are interested. In addition, Reuters reported that Airbus is interested in the pending Sikorsky transaction. The news service quoted Allan McArtor, chairman and CEO of Airbus Group, Inc., as saying, "We are interested to see what United Technologies intends to do with Sikorsky.” McArtor oversees all of Airbus’ operations, activities and strategy in the U.S., Canada and Latin America.

UTC in March said it was weighing options for Sikorsky and expected to execute a decision by the end of the year. The move was prompted by concerns that Sikorsky’s product line does not fit that of UTC, which produces building and industrial systems, Pratt & Whitney turbine engines and aircraft systems. Of the pending transaction, UTC Chief Financial Officer Akhil Johri told an investors’ conference June 4: "Over the next couple of months, I think that will get finalized."

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