United Tech CEO Defends Rockwell Deal -- 3rd Update
05 Septiembre 2017 - 11:39AM
Noticias Dow Jones
By Doug Cameron and Thomas Gryta
United Technologies Corp. is devoting $23 billion to buying
Rockwell Collins Inc. as it seeks the missing link in a broader
quest by the global aerospace sector: building the digitally
connected aircraft.
Aerospace companies are investing heavily to connect everything
from engines and brakes to even coffee pots equipped with sensors,
allowing them to predict when they will break and ensure they are
best placed to fix or replace them.
Maintenance and repairs have long been the most profitable part
of the aircraft industry, prompting efforts by Airbus SE, Boeing
Co. and others to secure a larger slice of the business, moves
potentially threatened by United Technologies' move on Rockwell
Collins.
"It gives us the opportunity to do things that we wouldn't be
able to do on our own," said United Technologies CEO Greg Hayes on
a Tuesday conference call. The combination with Rockwell Collins
will make it easier to meet demand for digital offerings, he said,
and integrate aircraft systems with benefits like reducing over all
weight.
"Everything is going to become a smart device," Rockwell
Collins' CEO Kelly Ortberg told investors last year.
Mr. Ortberg would become CEO of a new United Technologies unit,
Collins Aerospace, with annual sales of $23 billion this year, a
level of heft that some believe could make Airbus and Boeing
uncomfortable.
"This may greatly concern aircraft [makers] such as Airbus and
Boeing as they confront an ever increasing proportion of their
supply chain controlled by a single supplier," said Stephen Perry,
managing director at Janes Capital Partners, a boutique aerospace
investment bank.
Boeing adopted a tough stance on the proposed transaction,
saying it was "skeptical" the combination would benefit its
customers or the broader industry and threatened to drop some of
its contracts with the two companies if its initial concerns were
confirmed.
An Airbus spokesman said the company hopes "that this M&A
will not distract UTC from their top operational priority."
Both Airbus and Boeing privately lobbied last year against plans
for United Technologies to buy Honeywell International Inc.,
according to people familiar with the situation. However,
Honeywell's $15 billion aerospace unit had far more product overlap
with United Technologies.
Shares of Rockwell Collins traded at $131.55 early Tuesday, well
below United Technologies' $140-a-share offer and Rockwell's recent
highs. Potential antitrust action from the sheer scale of the
proposed deal -- rather than product overlap -- still leave some
question marks, analysts said.
The deal isn't expected to close until the third quarter of 2018
as regulatory and competitive concerns are reviewed.
United Technologies is already the world's largest aerospace
supplier, with almost $30 billion in sales this year split evenly
between its Pratt & Whitney engine unit and UTC Aerospace
Systems, which makes everything from landing gear to the motors
that control wing flaps.
Rockwell Collins would add another $9 billion in annual sales
derived from its business of cockpit controls and communication
equipment and this year's purchase of B/E Aerospace, the biggest
provider of aircraft seats.
Mr. Hayes said United Technologies and Rockwell will have to
work with customers that have change-in-control clauses in their
contracts, but played down the risks. "We don't see anything that
will stop this transaction from happening," he said.
The potential customer concerns stem from the great presence the
new company would have on new jets. By buying B/E Aerospace,
Rockwell Collins tripled the value of what it supplies for a
typical wide-body jet and doubled that for narrow-body planes.
Rockwell also makes the sensors and communication systems
allowing the performance of those products to be tracked in real
time by airlines and other users, allowing them to decide when
maintenance and spares are required.
Write to Doug Cameron at doug.cameron@wsj.com and Thomas Gryta
at thomas.gryta@wsj.com
(END) Dow Jones Newswires
September 05, 2017 12:24 ET (16:24 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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