March 12 (Reuters) - United Technologies Corp's Sikorsky helicopter unit could be acquired by another big defense company, but the potential for a big tax bill means the maker of Black Hawk helicopters will more likely be spun off into a standalone company, analysts said.
UTC shares were up 1.9 percent on Thursday as company executives were scheduled to discuss alternatives for Sikorsky, including a split-off, at an investor day.
Potential buyers include Boeing Co, Textron Inc , Airbus and BAE Systems and even Lockheed Martin Corp.
Lockheed does not build helicopters but works closely with Sikorsky on outfitting and servicing MH-60 Sea Hawk helicopters for the U.S. Navy.
Chief Pentagon arms buyer Frank Kendall told UTC that the Defense Department would not object to a spinoff, a source told Reuters.
A former defense official said the Pentagon would probably insist that Sikorsky was well capitalized to ensure its survival.
U.S. weapons makers could object to a combination of Sikorsky and Boeing, which makes Apache and Chinook helicopters for the Army, the former defense official said.
But the Pentagon might view the situation differently since the existing Boeing and Sikorsky helicopter programs are beginning to wind down. The two companies have teamed up to compete to build a replacement for the Black Hawk and Apache helicopters.
UTC has not ruled out a sale, but a buyer could face significant taxes since the value of Sikorsky has increased so much since the company acquired it in 1929, analysts said.
"The tax bill would be very punitive," said Sterne Agee analyst Peter Arment. "You'd have to have a premium well above to cover that liability."
Analysts put Sikorsky's value at $7 billion to $10 billion. The unit posted a profit of $219 million last year on sales of $7.5 billion. UTC reported revenue of $65 billion.
Bank of America Merrill Lynch senior research analyst Ron Epstein said the high tax bill would be less of an issue if Sikorsky was a standalone company for two years. However, a buyer could act now to avoid paying a higher price once the company begins trading on its own, he said.
UTC's decision to consider spinning off Sikorsky follows similar moves in the defense industry in recent years. Northrop Grumman spun off its Huntington Ingalls Industries shipbuilding unit, and ITT Corp spun off Exelis , which Harris Corp is now buying. (Reporting by Lewis Krauskopf in New York and Andrea Shalal in Washington; Editing by Joseph B. White and Lisa Von Ahn)