United Tech Nears Deal to Buy Rockwell Collins for More Than $20 Billion -- 3rd Update
August 29 2017 - 7:00PM
Dow Jones News
By Dana Mattioli, Joann S. Lublin and David Benoit
United Technologies Corp. is nearing a deal to buy Rockwell
Collins Inc. for more than $20 billion, a tie-up that would create
one of the world's biggest aircraft-equipment makers.
The companies are discussing a per-share price for Rockwell of
$140 or less and could come to an agreement as soon as this
weekend, according to people familiar with the situation.
Rockwell shares rose on the news, first reported by The Wall
Street Journal Tuesday, closing up 2.1% at $130.74 and giving the
company a market value of about $21 billion. United Technologies,
meanwhile, jumped 2.9% to $118.70, giving the industrial
conglomerate a market value of about $95 billion. United
Technologies investors cheered the likelihood that the company will
be able to secure the deal without paying a higher price that some
had expected.
As with all acquisition talks, it's possible these could hit a
snag and not result in a deal, or the expected price could
change.
Should the transaction happen, it would rank as the largest
aerospace deal on record, eclipsing United Technologies' 2012
acquisition of Goodrich Corp. for about $16.5 billion, according to
Dealogic. It would also be one of the five-biggest takeovers of the
year, Dealogic data show.
The deal would boost United Technologies' business supplying
Boeing Co. and Airbus SE as the aerospace industry ramps up for a
new generation of jets. The company already owns one of the world's
biggest jet-engine makers, Pratt & Whitney, part of an
aerospace division that also makes parts such as wheels and landing
gear.
Rockwell specializes in cockpit displays and communications
systems for passenger jets and military programs. In April, the
Cedar Rapids, Iowa, company closed its roughly $6 billion
acquisition of B/E Aerospace Inc., a maker of plane seats and
interiors.
Since word of the talks surfaced this month, several analysts
have said they don't expect significant antitrust issues, given
that United Technologies and Rockwell make different airplane
parts. But airplane manufacturers might voice concerns about any
consolidation among their suppliers. Boeing and Airbus have also
been nudging their way into aftermarket business to capture some of
the profit from selling and servicing parts -- putting them on a
collision course with suppliers.
The possibility of a United Technologies deal for Rockwell
caught some analysts by surprise. In June, United Technologies
Chief Executive Greg Hayes told analysts the Farmington, Conn.,
company was looking to spend roughly $1 billion on acquisitions
this year. It had about $7 billion in cash.
"As far as bigger M&A, it's something we always look at, but
I am reluctant to go out and pay some of the prices that we see
today," Mr. Hayes said at the Paris Air Show.
Last year, United Technologies, which also makes Carrier climate
control systems and Otis elevators, rebuffed unsolicited takeover
approaches from Honeywell International Inc.
Merger activity has been somewhat tepid this year, as
uncertainty around possible tax changes and other factors have kept
companies on the sidelines. Deal volume in the U.S. so far stands
at about $803 billion, down 14%, according to Dealogic.
Thomas Gryta contributed to this article.
Write to Dana Mattioli at dana.mattioli@wsj.com, Joann S. Lublin
at joann.lublin@wsj.com and David Benoit at
david.benoit@wsj.com
(END) Dow Jones Newswires
August 29, 2017 19:45 ET (23:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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