UTC Proposes $30B Deal for Rockwell Collins in Aerospace Market Push; Greg Hayes Comments

United Technologies Corp. (NYSE: UTX) has agreed to purchase Cedar Rapids, Iowa-based avionics contractor Rockwell Collins (NYSE: COL) through an estimated $30 billion transaction in a move to establish a new aerospace systems supplier that will work to meet the evolving needs of global clients.

Farmington, Connecticut-based conglomerate UTC said Monday it will pay approximately $23 billion in cash and stock, or $140 per share, and assume $7 billion in net debt from Rockwell Collins under the deal.

Greg Hayes, UTC chairman and CEO, said the acquisition would add capabilities to UTC’s aerospace businesses and build up its complementary aerospace systems offerings.

Each Rockwell Collins stockholder will get $93.33 in cash per share and $46.67 in UTC stock, which will be subject to a 7.5 percent collar based on UTC’s closing share price of $115.69 on Aug. 22.

Both companies expect to close the transaction during the third quarter of 2018, subject to approvals by Rockwell Collins shareholders and regulatory authorities.

UTC will combine Rockwell Collins with its aerospace systems business to form a new business unit that will operate as Collins Aerospace Systems and will fund the deal’s cash portion through cash on hand and debt issuances.

Kelly Ortberg, chairman, president and CEO of Rockwell Collins, will serve as CEO of Collins Aerospace Systems while Dave Gitlin, president of UTC Aerospace Systems, will take over as president and chief operating officer of the business unit upon the deal’s completion.

UTC expects the transaction to generate more than $500 million in cost synergies by the fourth year and to be accretive to the conglomerate’s adjusted earnings per share following the first full year.

Morgan Stanley & Co. and Wachtell, Lipton, Rosen & Katz respectively serve as financial and legal advisers to UTC in the transaction.

J.P. Morgan Securities and Citigroup Global Markets act as financial advisers to Rockwell Collins, while Skadden, Arps, Slate, Meagher & Flom serve as legal adviser to the firm in the deal.