The proposed $30 billion sale of Rockwell Collins Inc. to aerospace giant United Technologies Corp. took another major step forward Monday when Boeing gave its approval to the deal.
UTC's offer, which includes absorbing $7 billion in Rockwell debt, was announced Sept. 4.
The companies project the deal closing as early as July. Rockwell shareholders approved the offer Jan. 11.
Boeing said in a statement it has reached an agreement with the two key suppliers to help facilitate its cost-cutting initiative.
The proposed deal has drawn mixed reactions from analysts and investors, including several who claim United is overpaying for Rockwell.
"At a time of record industry production, it is critically important that we have business arrangements with all of our suppliers that drive increased focus on meeting their cost, schedule and quality commitments to Boeing and our customers," Boeing said.
"Following productive discussions with United Technologies and Rockwell Collins, Boeing has reached win-win agreements with each of them that bring value to our customers and support our companies' competitiveness.
"As part of the agreements, we have provided consent to their transaction under our contracts."
Rockwell declined comment on the Boeing statement.
Bloomberg News reported separately Monday that Greg Hayes, chairman and chief executive of UTC, said he plans to retire upon the full integration of Rockwell, which is projected to take three to five years.
Rockwell has 1,600 employees at the Winston-Salem operations it acquired in April from B/E Aerospace Inc. A restructuring confirmed Feb. 2 includes shifting some seat production to the Philippines, lowering the local workforce overall by about 100 employees.
The deal still requires federal regulatory approval, which is where Boeing's support or opposition was key.
Shortly after the deal was announced, Boeing and Airbus said they would review the regulatory process.
Boeing indicated the potential for opposing it out of concerns that a larger UTC could disrupt supplier competition in the industry, or require the amending of some contracts.
Boeing also has said it is considering taking in-house some supplier production to save money, such as work done by two companies. When asked for an update, Boeing said it didn't have further comment beyond the statement.
"Boeing's interests and those of our customers, employees and other stakeholders are in ensuring the long-term health and competitiveness of the aerospace industry supply chain," Boeing said Monday.
Some analysts say the deal may face more potential anti-trust opposition from European Union review than the Federal Trade Commission when it comes to concerns about concentrating too much supplier market share into a combined United-Rockwell entity.
Altogether, there are 17 regulatory agencies across the world that have to approve the deal.
Hayes discussed his future with Bloomberg on Monday, saying that "if you stay around too long, you disenfranchise the next generation of leadership."
"We have some good, solid leaders out there, the next generation coming up. My time will come and I'll go off and do something else."
Rockwell, based in Cedar Rapids, Iowa, and UTC Aerospace Systems, based in Charlotte, would be integrated to create Collins Aerospace Systems. Rockwell's top executive Kelly Ortberg will serve as Collins Aerospace's chief executive.
On Feb. 23, the companies said Collins Aerospace would keep its aircraft interiors operations in Winston-Salem. Collins Aerospace would have a small executive leadership office in Palm Beach County, Fla., at an existing UTC site.
The other business units and their main sites would be: aerostructures in Chula Vista, Calif.; avionics in Cedar Rapids; mechanical systems in Charlotte; mission systems in Cedar Rapids; and power and controls in Windsor Locks, Conn.
Analysts have speculated that if such a deal occurred, part of the aftermath would involve United spinning off or selling off non-core operations.
Hayes has hinted at such an eventual possibility.
"Once we have completed the integration of Rockwell Collins and made progress toward reducing leverage back to historical levels, we will have an opportunity to explore a full range of strategic options for UTC," Hayes told analysts.
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