Lockheed Sikorsky deal marks turning point for more assertive CEO
By Andrea Shalal
WASHINGTON (Reuters) - Lockheed Martin Corp's (LMT.N: Quote) decision to buy helicopter maker Sikorsky Aircraft and sell $6 billion in lower-margin units marks a clear turning point for Lockheed CEO Marillyn Hewson, who is shaking up the world's largest weapons maker.
Thrust into the CEO job in January 2013 after retiring CEO Robert Stevens' designated successor was fired for having an affair with a subordinate, Hewson spent her first year largely executing a strategy Stevens had mapped out and repairing tense ties with the Pentagon on the $391 billion F-35 fighter program.
Over the past 18 months, the seemingly mild-mannered engineer who is ranked No. 4 on Fortune's list of most powerful U.S. women executives, has grown more assertive, her power buoyed by a powerful share price rally that has earned her the respect of her board and key shareholders.
Lockheed shares closed at $202.79 on Wednesday, not far off a historic high of $207 reached in February.
"It's a great story. The accidental CEO steps in, doubles the share price, raises margins and then executes the biggest M&A deal the company has done in two decades," said one industry executive familiar with Hewson's career. "But remember, the higher you aim, the greater the crash if things don't work out."
Indeed, the Sikorsky acquisition could test the 61-year-old executive's legacy of pleasing investors by running a tight ship.
Industry executives said Hewson's track record of cutting costs - she pared the company's workforce by 8,000 people, or 6.7 percent, closed facilities and streamlined its structure - helped her convince Lockheed's generally conservative board to make a bet on the helicopter maker.
That may not have been an easy call given a market downturn and uncertain outlook for near-term military sales. To seal the takeover of the unit that United Technologies Corp (UTX.N: Quote) unloaded because of its narrow margins, Lockheed agreed to pay a premium $9 billion for a company projecting revenues of just $6.5 billion. Continued...