United Technologies to acquire Rockwell Collins for $30 billion


United Technologies Corp has announced that it plans to buy avionics supplier Rockwell Collins for $30 billion.

The deal, which includes includes $23 billion in equity and $7 billion in debt, values Rockwell Collins at $140 per share in cash and UTC stock.

UTC sees the acquisition as way of expanding and diversifying its product offerings in the aerospace sector.

“This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” said Greg Hayes, chairman and CEO of UTC. “Together, Rockwell Collins and UTC Aerospace Systems will enhance customer value in a rapidly evolving aerospace industry by making aircraft more intelligent and more connected.”

Rumours of a takeover began surfacing earlier in the year, and increased Rockwell’s stock price by over 41%. The stock opened this year at $92.76, and had ended August at $131.05.

Rockwell Collins shareholders will get $93.33 per share in cash, and $46.67 in UTC common shares.

UTC’s aviation brands include engine manufacturer Pratt & Whitney and UTC Aerospace Systems, which manufactures systems and components for civil, military and business aircraft. The company also owned helicopter manufacturer Sikorsky until 2015.

Rockwell Collins designs and builds avionics systems for business aircraft, as well as interiors thanks to the acquisition in 2016 of B/E Aerospace.

The deal is expected to be completed in the third quarter of 2018, creating a combined company called Collins Aerospace Systems. UTC says that the combined company will be able to achieve $500 million in cost savings annually.

“The integrated companies’ expertise in developing electrical, mechanical and software solutions will allow us to deliver more innovative products and services and provide greater value to our customers and shareowners,” said Hayes. “This combination will also create new opportunities for the talented employees of both companies to advance innovation in a growing and dynamic industry. Importantly, UTC and Rockwell Collins share cultures of mutual trust and respect, accountability and teamwork that will allow us to work together to achieve our common goals.”

Infographic courtesy of UTC