United Technologies in bid to acquire Rockwell Collins: source


(Reuters) – United Technologies Corp (UTX.N), the U.S. maker of Otis Elevators and Carrier air conditioners, has submitted an offer to acquire aircraft component manufacturer Rockwell Collins Inc (COL.N), a person familiar with the matter said on Friday.

By acquiring Rockwell Collins, which has a market capitalization of $19.3 billion, United Technologies would bulk up its aerospace group, giving it the option of separating it from the company’s other industrial units.

Rockwell Collins has been working with an investment bank to review United Technologies’ offer, and there is no certainty that it will decide to engage in any further negotiations with United Technologies, the source said.

The source asked not to be identified because the matter is confidential. Rockwell Collins and United Technologies declined to comment.

Bloomberg News reported earlier on Friday that United Technologies was “weighing” a potential acquisition of Rockwell Collins, but said it was unclear whether the two companies were currently in talks.

A combination of the two large aerospace suppliers would meld Rockwell’s commercial and military aircraft avionics business with United Technologies’ broad portfolio that includes aircraft engines, structures, cockpit and cabin controls, ventilation systems and other electronic and mechanical devices used in aviation.

United Technologies’ Pratt & Whitney engine unit has had production problems with its new Geared Turbofan engine, prompting delays of new Airbus (AIR.PA) A320neo aircraft. United Technologies also has noted weakness in demand for Otis elevators, particularly in China, which has weighed on results.

In April, Rockwell acquired B/E Aerospace, a maker of aircraft seats, lavatories and galleys, a deal that broadened its product lines but drew questions from analysts and investors who saw little logic in combining the two businesses.

Rockwell expanded its avionics business with a deal to provide aircraft data networking services, known as FOMAX, for all new Airbus A320 aircraft starting in 2018.

A deal with United Technologies would open the way for Rockwell to capitalize on “connected aircraft” that can transmit sophisticated data about onboard systems, routes and weather, allowing airlines to improve operations and maintenance.

United Technologies has a market capitalization of $96.8 billion. The company beat expectations for quarterly revenue and profit in the latest quarter, and said it had solved a supply chain problem with the Geared Turbofan engines that had caused Airbus to delay deliveries of the new A320neo aircraft.

Last year, United Technologies fended off a takeover approach from Honeywell International Inc (HON.N).

Reporting by Mike Stone in Washington and Alwyn Scott in New York; editing by Tom Brown and David Gregorio

Source