March 13, 2015 / 12:45 AM / 3 years ago

U.S. arms buyer sees no cost impact from possible Sikorsky spin

WASHINGTON, March 12 (Reuters) - A spinoff of United Technologies Corp’s Sikorsky Aircraft as a standalone company should not have any impact on the U.S. Defense Department’s costs, the Pentagon’s acquisition chief said Thursday.

Defense Undersecretary Frank Kendall said he was “neutral” about United Technologies’ announcement that it was considering a spinoff of the maker of Black Hawk helicopters.

“At this point, based on what I know about the deal, I’m neutral about it. It should not impact us as far as cost or rates are concerned,” Kendall told reporters after an event hosted by Bloomberg Government.

Analysts on Thursday said the potential for a big tax bill means Sikorsky will more likely be spun off into a standalone company than sold outright to potential buyers such as Boeing Co , Textron Inc, Airbus or BAE Systems .

Asked about his views on possible consolidation among top tier weapons makers, Kendall said the department was not encouraging such moves by industry despite a downturn in military spending.

“At the top tier, we’re comfortable where we are. We want the market forces to work below that, and we’ll look at individual mergers on a case-by-case basis, or deals like the Sikorsky one,” he said.

Kendall said he did not expect an upcoming decision by the Air Force about a new long-range strike bomber to trigger a major merger or acquisition, as some analysts have suggested.

He said the decision would be made on the merits of the proposals, not the potential impact on the industrial base.

Boeing Co and its partner Lockheed Martin Corp are competing with B-2 maker Northrop Grumman Corp for a contract valued at $50 billion to $80 billion to build 80 to 100 new bombers for the Air Force. (Reporting by Andrea Shalal’ Editing by Cynthia Osterman)

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