NEW YORK (Reuters) - United Technologies Corp’s (UTX.N) chief executive officer said on Thursday that a sale of its Sikorsky helicopter unit would be “very hard” due to the heavy tax liability that would come with such a disposition.
United Technologies said on Wednesday it is exploring alternatives for Sikorsky, including a potential spinoff. Any buyer is expected to face significant taxes, because the value of Sikorsky has appreciated so much since it became part of United Tech in 1929.
“I think a sale would be very hard just because of the very low tax basis,” United Tech CEO Greg Hayes told reporters after the company held a presentation for Wall Street in New York.
The CEO’s comments echoed the expectations of analysts, who have deemed a sale less likely.
Hayes said in the past couple of months he “did talk to people about a potential acquisition. But I explained very clearly to them that it would be difficult to make any type of a sale work.”
“As we had those discussions, it became clear that very few people would probably step up and do it,” he added.
Previously the company’s finance chief, Hayes in November replaced prior CEO Louis Chenevert, who considered Sikorsky to be an “iconic asset,” Hayes said.
While Hayes said he did not disagree with that, he said the fact that Sikorsky had slower growth prospects, lower margins and was primarily a military contractor means, as an independent company, “it will attract a type of investor different than those that are looking for higher-growth commercial businesses.”
Reporting by Lewis Krauskopf; Editing by Jonathan Oatis