United Technologies, the Connecticut based conglomerate that build elevators, jet engines, and HVAC systems, is attempting to purchase Rockwell Collins. Based in Iowa, Rockwell Collins an aerospace supplier producing cutting edge technologies like the F-35’s new Gen III Helmet Mounted Display System (seen in the picture nearby) that would be a great bolt-on business addition to United Technologies’ aerospace segment, its most profitable business.
Dana Mattioli and Joann S. Lublin report for the Wall Street Journal:
Rockwell specializes in cockpit displays and communications systems for passenger jets and military programs. In April, the Cedar Rapids, Iowa, company closed its acquisition of B/E Aerospace, a maker of plane seats and interiors. The deal added almost $3 billion in annual sales to a company with $5.3 billion in revenue.
In June, United Technologies Chief Executive Greg Hayes told analysts the company, which had about $7 billion in cash, was looking to spend roughly $1 billion on acquisitions this year.
“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.
The Farmington, Conn., company also manufactures Otis elevators and Carrier air conditioners, but more than half of its $15.28 billion in second-quarter revenue came from its jet-engine and aerospace divisions. United Technologies sold its Sikorsky helicopter business to Lockheed Martin Corp. in 2015.
Analysts at William Blair said a takeover of Rockwell Collins would make “tremendous strategic sense” as it would expand United Technologies’ most profitable business with little overlap. But the firm thinks a deal is unlikely because United Technologies management has said it is interested in smaller transactions.
Several analysts said they wouldn’t expect significant antitrust issues with a merger, but airplane makers might voice concerns about any consolidation among their suppliers. Both companies are also major Pentagon suppliers.
Read more here.
F-35 Helmet Display System
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