UTC buying Rockwell Collins for $32b

Mega aviation deal will create behemoth able to outfit all aircraft from tip to tail

NEW YORK • United Technologies Corp (UTC) has agreed to buy Rockwell Collins for about US$23 billion (S$32 billion), creating an aerospace behemoth that can outfit jetliners and warplanes from tip to tail.

The deal, one of the biggest in aviation history, will create a giant in aircraft parts better positioned to withstand the squeeze from planemakers Boeing and Airbus for pricing discounts and higher output.

The resulting company will boast a broad suite of products for commercial aircraft, from Rockwell Collins' touchscreen cockpit displays to jet engines made by the Pratt & Whitney division of UTC.

"This is a significant deal for UTC and the aviation industry," said Mr Hans Weber, president of consultancy Tecop International. By buying Rockwell Collins, which delivers avionics systems for the US planemaker's 787, "UTC becomes a critically important supplier to Boeing and will have a strong negotiating position as Boeing is putting price pressure on suppliers".

Rockwell Collins shareholders will receive US$140 a share in cash and stock, the companies said in a statement on Monday. The price represents an 18 per cent premium to Rockwell Collins' closing level on Aug 4, before Bloomberg News reported on the deal talks.

The Cedar Rapids company closed at US$130.61 on Sept 1. UTC has fallen 2.9 per cent in that span. Including net debt, the total deal value is about US$30 billion.

Airbus has issued a veiled warning to UTC to not let empire building get in the way of critical deliveries for the French planemaker. "Our total focus is on delivering planes, and we hope this M&A would not distract UTC from its top operational priority," it said. 

UTC plans to combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems. Rockwell Collins chief executive officer Kelly Ortberg will head the division, while Mr Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.

"This acquisition adds tremendous capabilities to our aerospace businesses," said Mr Greg Hayes, chief executive officer of UTC.

The company will focus on developing technologically advanced equipment to make aircraft "more intelligent and more connected".

With the acquisition, UTC is increasing its bet on commercial-aircraft systems.

Rockwell Collins has a customer base that spans the world's largest airlines, airports and private-jet operators.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 06, 2017, with the headline 'UTC buying Rockwell Collins for $32b'. Print Edition | Subscribe