Have you heard the news? United Technologies (NYSE: UTX ) may soon sell or spin off its Sikorsky helicopter division.
Rumors of the whirlybird spinoff sparked heated debate among investors: Is it true that United Tech will unload one of its best-known brands? And if so, why? (And for how much?)
The answer to that last question is pretty easy. A true industrial conglomerate, United Technologies owns such valuable brands as Otis elevators, Carrier air conditioners, Pratt & Whitney engines -- and, of course, Sikorsky helicopters. As a whole, the company is valued at 1.65 times annual sales.
But historically, high-quality defense companies -- and United Technologies is the eighth biggest defense contractor in the world -- tend to sell for only about one-times their annual sales. With $6.2 billion in revenue recorded over the past year, a separate Sikorsky division would therefore probably be valued at about $6.2 billion -- a significant discount to the valuation of United Technologies as a whole. And this would be true whether Sikorsky is sold to an acquirer like Boeing (NYSE: BA ) , Textron (NYSE: TXT ) , or Britain's BAE Systems (NASDAQOTH: BAESY ) -- or whether it gets spun off as an independent entity.
As for the other questions, though, those are a bit trickier. In the following slides, we'll lay out for you the pros and possible cons of a decision by United Technologies to unload Sikorsky. Read on, and prepare to be amazed -- and make sure to check out our special free report at the end.
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