CEO: UTC On Track To Soon Close $30 Billion Rockwell Collins Deal

United Technologies Corp. is on track to closing its $30 billion acquisition of aviation manufacturer Rockwell Collins Inc. in the next two weeks, though wrapping up the deal was complicated by a divestiture, Chief Executive Officer Gregory Hayes said Friday.

“The fact is it has taken us a little bit longer,” he said at an analysts conference. “We still expect to close before the end of this month.”

Shares of UTC jumped 1.7 percent, closing at $137.80. Rockwell Collins rose 1.3 percent, ending the day at $141.49.

UTC has answered all questions from regulators, but the two companies took longer to find a buyer for one of Rockwell Collins’ businesses, Hayes said.

Paris-based Safran, a technology group in the aircraft propulsion and equipment, space and defense markets, announced last week that it is buying Rockwell Collins’ actuators, pilot controls and special products business

UTC and Rockwell Collins, an Iowa company that makes aircraft cabin interiors, cockpit equipment and other components, have identified at least $500 million in savings by putting the two companies together, Hayes said.

UTC is seeking to capitalize on airline transportation that’s been growing among a rising middle class in once-developing nations such as China, India and other Asian nations. Buying Rockwell Collins would give UTC a dominant presence in the aviation industry.

Hayes also said he expects to report within 60 days on “strategic options” related to a possible breakup of UTC, separating its aerospace business that will grow significantly with the Rockwell Collins acquisition and its building systems businesses.

“I would tell you that we haven’t been waiting for the close of Rockwell to do the work,” he said.

UTC has been under pressure to consider, if not adopt, a plan to create more value for shareholders by separating its sprawling aerospace businesses that don’t fit with other subsidiaries that make heating and cooling equipment, elevators and building security systems.

“I can’t tell you what UTC will look like 18 months from now,” Hayes said. “I will tell you we’re going to explore every single option that’s out there and what’s the best way to create value.”

A major consideration is a tax bill of $2.5 billion to $3 billion to local jurisdictions around the world if UTC pulls apart 1,200 legal entities, he said.

“That’s going to be a big damn number,” he said.

But Hayes said it’s small when viewed in the context of UTC’s nearly $110 billion market value.

Other considerations include ending single corporate operations that would be by multiple applications. For example, Hayes said UTC uses a single information technology system that would have to be adapted to stand-alone companies.

“That won’t be the impediment I think at the end of the day to what we decide to do strategically with the portfolio,” he said.

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