United Technologies Agrees to Buy Rockwell CollinsBy Ed Hammond
, Rick Clough
, Julie Johnsson
, and Dinesh Nair
2017年9月5日 上午6:54 [GMT+8] 2017年9月5日 上午8:27 [GMT+8]
United Technologies Corp. agreed to buy Rockwell Collins Inc. for about $23 billion, creating an aerospace behemoth that can outfit jetliners and warplanes from tip to tail.
- Companies to create aerospace division to be headed by Ortberg
- Price of $140 a share is 18% higher than before news of talks
Rockwell Collins shareholders will receive $140 a share in cash and stock, the companies said in a statement Monday. Including net debt, the total deal value is about $30 billion.
The transaction, one of the biggest in aviation history, creates an aircraft-parts giant better positioned to withstand the squeeze from planemakers Boeing Co. and Airbus SE for pricing discounts and higher output. The resulting company will boast a broad suite of products for commercial aircraft, from Rockwell Collins’s touchscreen cockpit displays to jet engines made by the Pratt & Whitney division of United Technologies.
“This acquisition adds tremendous capabilities to our aerospace businesses,” Greg Hayes, chief executive officer of United Technologies, said in the statement. The company will focus on developing technologically advanced equipment to make aircraft “more intelligent and more connected.”
United Technologies said it will combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems. Rockwell Collins CEO Kelly Ortberg will head the division, while Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.
The price of $140 a share represents an 18 percent premium to Rockwell Collins’s closing level on Aug. 4, before Bloomberg News reported on the deal talks. The Cedar Rapids, Iowa-based company closed at $130.61 on Sept. 1.
Aerospace BetRockwell Collins climbed 9.8 percent since initial reports of the deal talks, while United Technologies fell 2.9 percent in that span.
With the acquisition, United Technologies is increasing its bet on aerospace, where it has stumbled recently with the rocky rollout of a new jet engine that cost $10 billion to develop. The market accounts for about half of sales at the Farmington, Connecticut-based manufacturer, with the rest coming from elevators, air conditioners and other building systems.
The company expects the acquisition to add to adjusted earnings after the first year following closing, and generate $500 million or more in annual pretax savings and other benefits by the fourth year. The deal is expected to close by next year’s third quarter, subject to regulatory and shareholder approval, and other customary conditions.
Industry DealmakingRockwell Collins is already absorbing the largest acquisition in its history. The company earlier this year closed the acquisition of B/E Aerospace, adding deluxe jetliner seats, lavatories and galley equipment to a lineup of high-technology avionics products. That deal was valued at $8.6 billion including the assumption of debt.
When Hayes took the United Technologies helm in 2014, he pledged to consider major moves, including deals potentially in excess of $20 billion. The company sold its Sikorsky helicopter business to Lockheed Martin Corp. for $9 billion in 2015. Hayes rejected a merger proposal in early 2016 from Honeywell International Inc., saying he didn’t believe antitrust regulators would have approved the $90 billion tie-up. Honeywell later abandoned the bid.
The Rockwell Collins transaction tops United Technologies’ own $18 billion purchase of Goodrich Corp. in 2012. Billionaire Warren Buffett’s Berkshire Hathaway Inc. last year completed the acquisition of Precision Castparts Corp., a metals fabricator that produces parts for aerospace suppliers, for $37 billion including debt.
Manufacturer PressureThe industry consolidation comes as suppliers face pressure from airframe manufacturers to reduce costs and boost production rates to support faster output of narrow-body jetliners such as Airbus’s A320 and Boeing’s 737. The U.S. planemaker is also treading onto its suppliers’ turf with new businesses dedicated to spare parts and services, as well as avionics.
Rockwell Collins has a customer base that spans the world’s largest airlines, airports and private-jet operators. Those clients, combined with the company’s catalog of avionics and aircraft-cabin equipment could help insulate the merged company from Boeing’s expansion into aftermarket sales and services, Douglas Rothacker and Joel Levington of Bloomberg Intelligence said in a report before the deal was announced.
The United Technologies-Rockwell Collins deal would combine two storied companies with roots in the early days of the U.S. aviation industry.
Arthur Collins founded the eponymous short-wave radio company in 1933. Collins Radio made its mark serving a South Pole expedition by Rear Admiral Richard Byrd, also expanding into airplane communications and eventually into space as a supplier to the Mercury, Gemini and Apollo missions.
The acquirer is a descendant of the United Aircraft and Transport Corp., a conglomerate formed by Boeing founder William Boeing and Pratt & Whitney’s Frederick Rentschler. Trust busters in 1934 broke up the company, which included Boeing, Pratt and United Airlines.
Morgan Stanley served as financial adviser to United Technologies, while Wachtell, Lipton, Rosen & Katz provided legal advice. JPMorgan Chase & Co. and Citigroup Inc. were financial advisers to Rockwell Collins, and Skadden, Arps, Slate, Meagher & Flom handled legal advisory services.