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United Technologies : UTC An Ardent Suitor In Rockwell Collins Deal

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12/13/2017 | 02:05pm CET

Dec. 13--United Technologies Corp., eager to add a significant aerospace components manufacturer to its portfolio, was an ardent suitor of Rockwell Collins Inc., according to company documents filed with regulators.

Gregory Hayes, UTC's chief executive officer, approached Rockwell Collins' CEO in January, beginning seven months of negotiations, according to a filing by the two companies with the U.S. Securities and Exchange Commission. The Farmington-based UTC increased its proposed purchase price three times, though it rejected one counteroffer as too pricey.

UTC, which also makes Otis elevators, Carrier heating and cooling equipment and building security systems, said it would consider buying Rockwell Collins even if another potential buyer "were to present itself."

The $30 billion deal, which was announced Sept. 4 and should close next summer or fall, is expected to help UTC become a dominant player in aerospace. Its intent is also to counter moves into lucrative aircraft maintenance and repair markets by manufacturers such as Boeing.

Aiming to provide transparency with shareholders, the public and federal regulators, UTC and Rockwell Collins outlined their discussions that led to the deal.

Hayes contacted Robert K. Ortberg, CEO of Rockwell Collins, on Jan. 23, seeking a meeting to discuss "potential business collaboration opportunities."

Ortberg turned Hayes down. Rockwell Collins was focused on closing on its $8.6 billion purchase of B/E Aerospace, a manufacturer of aircraft cabin interior products and services.

With that acquisition, Rockwell Collins expanded its portfolio with cabin interior products for commercial aircraft and business jets, including seating, food and beverage preparation and storage equipment, lighting and oxygen systems and and bathrooms.

Again seeking a meeting, Hayes approached Ortberg in April, five days after Rockwell Collins completed its acquisition of B/E Aerospace.

"He kind of took them at their word," Edward Jones analyst Jeff Windau said of Hayes backing off until the B/E Aerospace deal was done.

Executives at Rockwell Collins agreed to a May 2 meeting, where UTC, which makes jet engines and airline parts and components such as landing gear and interior lighting, proposed a "strategic partnership" involving all of Rockwell Collins' businesses and UTC's aerospace systems business.

The proposal called for UTC to own a majority of the partnership, with Ortberg as chief executive officer. Rockwell Collins agreed only to continue discussing a deal.

At the same time, Rockwell Collins was in discussions with another company, not identified in its filing, that showed an interest in possibly acquiring it. Hayes contacted Ortberg May 22, telling him UTC would consider purchasing Rockwell Collins, even if "another acquirer of Rockwell Collins were to present itself."

The firm, referred to as "company A," eventually abandoned a possible deal.

Another unidentified company also considered an offer for Rockwell Collins, but the two parties walked away from a potential tie-up.

Executives of UTC and Rockwell Collins met in early June, discussing details of a UTC offer that proposed a 30 percent ownership stake in a partnership held by shareholders of Rockwell Collins and 70 percent by UTC shareholders.

Later that month, the Rockwell Collins board "expressed various concerns" with UTC's proposal, including the complexity of the structure and lack of control by the company's shareholders.

On July 8, UTC offered to buy Rockwell Collins for $130 a share, which Rockwell Collins rejected as too low. UTC increased its offer to $135 a share on July 20, which the Rockwell Collins board turned down.

UTC upped its offer to $139 a share Aug. 22. The Rockwell Collins board authorized management to negotiate with UTC to increase the price.

Rockwell Collins offered to sell itself at $141 a share in cash or $144, payable 70 percent in cash and 30 percent in UTC stock. UTC balked and the two sides agreed to $140 a share, two-thirds payable in cash and one-third in stock.

Nick Heymann, an analyst at William Blair, said the Rockwell Collins purchase puts UTC "in a much more competitive position." With its new acquisition, UTC can provide airlines with critical money-saving computer-generated data on plane weight, routes and other factors.


(c)2017 The Hartford Courant (Hartford, Conn.)

Visit The Hartford Courant (Hartford, Conn.) at www.courant.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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Financials ($)
Sales 2018 8 723 M
EBIT 2018 1 670 M
Net income 2018 1 033 M
Debt 2018 5 658 M
Yield 2018 1,09%
P/E ratio 2018 21,37
P/E ratio 2019 19,24
EV / Sales 2018 3,16x
EV / Sales 2019 2,93x
Capitalization 21 914 M
Duration : Period :
Rockwell Collins, Inc. Technical Analysis Chart | COL | US7743411016 | 4-Traders
Technical analysis trends ROCKWELL COLLINS, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 18
Average target price 131 $
Spread / Average Target -2,6%
EPS Revisions
Robert Kelly Ortberg Chairman, President & Chief Executive Officer
Bruce Michael King Senior Vice President-Operations
Patrick E. Allen Chief Financial Officer & Senior Vice President
Nan Mattai Senior VP-Engineering & Information Technology
Chris A. Davis Independent Director
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