Lockheed Martin seals $3.5B deal amid global defense spending spree

Valued at a market cap of $118 billion, Lockheed Martin is among the largest defense companies globally.

The defense manufacturer is buying its way deeper into undersea warfare, a corner of the military business that has quietly become one of the most valuable in the world.

The timing of the deal is notable, given that governments are spending on defense at a pace not seen in decades, and Lockheed (LMT) wants a bigger piece of that money before the window closes.

Here is what the company announced, why it matters, and what it says about where defense spending is headed next.

Lockheed Martin acquires Ultra Maritime

On July 6, 2026, Lockheed Martin announced it had signed a definitive agreement to acquire Ultra Maritime, a company that builds sonar systems, sonobuoys, torpedo-defense technology, radar, and autonomous sensors used to track enemy submarines.

The deal is valued at $3.45 billion.

Ultra Maritime sells to allied navies worldwide. That international reach is a big part of the appeal.

Once the deal closes, the Ultra Maritime team will join Lockheed’s Rotary and Mission Systems division, the same unit that builds the Black Hawk and Sikorsky helicopters.

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Stephanie Hill, who leads that division, said undersea dominance is tied to those who move the fastest and cooperate best with allies.

Hill stated:

“Undersea superiority belongs to those who move fastest and work together best. By joining forces with Ultra Maritime, we’re accelerating our commitment to deliver the most advanced undersea and anti-submarine warfare capabilities to our U.S. and allied partners across the globe.”

Shonnel Malani of Advent, which has backed Ultra Maritime since 2022, said the company has grown stronger and more innovative over the past four years and is now positioned for the next generation of naval warfare, according to a company statement.

Citi is advising Lockheed on the financial side, while Hogan Lovells, Cadwalader and Fried Frank are handling the deal’s legal and tax matters.

Undersea warfare could gain traction

Submarines and the tools used to hunt them have quietly become one of the most contested areas of modern defense.

Russia and China have both expanded their submarine fleets in recent years, and NATO allies have been racing to close the gap in sonar and tracking technology.

Buying an established player like Ultra Maritime lets Lockheed skip years of development and instead scale up something that already works and sells internationally.

Roughly 30% of Lockheed’s business already comes from outside the United States, and undersea threats are a shared concern for allies from Norway to Australia; a company with proven, exportable sonar products slots neatly into that strategy.

Countries are expanding their submarine fleets

China News Service/Getty Image

A massive headwind for Lockheed Martin stock

Global military spending hit $2.887 trillion in 2025, up 2.9% from the year before, marking the 11th straight year of increases, according to the Stockholm International Peace Research Institute (SIPRI).

According to the SIPRI report:

Military spending now eats up 2.5% of the world’s economic output, the highest share since 2009.
Europe’s defense budgets jumped 14% in 2025, the fastest pace since the early 1950s, as NATO members raced to meet new spending targets and respond to the ongoing war in Ukraine
Germany alone increased spending by 24%.
Asia and the Pacific region saw an 8.1% jump, led by China, Japan, and Taiwan, all of which are boosting military budgets amid rising regional tension, per SIPRI’s findings.
Interestingly, U.S. military spending fell 7.5% in 2025 to $954 billion, mainly because Congress did not approve new aid for Ukraine that year, SIPRI noted.
But that dip looks temporary. Congress has already approved more than $1 trillion for 2026, and the White House’s latest budget proposal could push that figure to $1.5 trillion in 2027.

That is the backdrop for Lockheed’s timing.

With budgets rising across Europe, Asia, and eventually the U.S. again, and with allied navies all facing the same undersea threats, owning a company that already sells sonar and tracking systems internationally gives Lockheed a head start on demand that is only growing.

What comes next for Lockheed Martin

The Ultra Maritime deal still needs to close through the usual regulatory process, and Lockheed has not said when that will happen.

But the strategic logic is clear. Defense spending is rising almost everywhere except, temporarily, the United States, and undersea warfare is one of the few areas where allied nations are all shopping for the same kind of technology at once.

For Lockheed, this is less about adding a new product line and more about locking in a global customer base before competitors do.

Investors watching the stock will want to see how quickly the company can fold Ultra Maritime’s international contracts into its own sprawling defense empire.