United Technologies to Buy Rockwell Collins

The month-long suspense that’s been building over about a possible United Technologies/Rockwell Collins deal finally ended Tuesday morning with an announcement Bloomberg called “one of the biggest in aviation history.” United Technologies chairman and CEO Greg Hayes confirmed his company will purchase Rockwell Collins for $30 billion.

Rockwell shareholders will receive $140 per share of the Cedar Rapids maker of leading-edge avionics, flight controls, aircraft interior and data connectivity solutions, with $93.33 in cash and the other $46.67 in United Technologies stock. Rockwell Collins said on a pro forma basis its estimated sales are greater than $8 billion. Using the same math, UTC expects 2017 global sales of $67-$68 billion. United Technologies will assume $7 billion in Rockwell Collins debt making the equity value of the transaction worth approximately $23 billion.

Once the deal closes, Rockwell Collins and UTC Aerospace Systems will join forces under the Collins Aerospace Systems banner. Current Rockwell Collins chairman Kelly Ortberg will serve as the new organization’s chief executive officer while UTC Aerospace Systems’ president David Gitlin will become its president and chief operating officer. Greg Hayes said the deal will “enhance customer value in a rapidly evolving aerospace industry by making aircraft more intelligent and more connected.”

Announcement of the UTC-Rockwell Collins hookup did not sit well with everyone, however, since the deal could offer Collins Aerospace Systems fresh negotiating leverage with suppliers and customers. The Boeing Company said in a statement, “We intend to take a hard look at the proposed combination of United Technologies and Rockwell Collins. Until we receive more details, we are skeptical that it would be in the best interest of — or add value to — our customers and industry … Should we determine that this deal is inconsistent with those interests, we would intend to exercise our contractual rights and pursue the appropriate regulatory options to protect our interests. Also, both companies are significant suppliers to Boeing and other OEMs, and at a time of record industry production, their first priority should be delivering on existing cost, schedule and quality commitments for their customers and ours.”

Barring any unforeseen roadblocks, the UTC Rockwell Collins transaction is expected to close by the third quarter 2018.