Aerospace supplier United Technologies Corp. has recently reached a definitive agreement to acquire the aviation systems and cabin equipment maker Rockwell Collins Inc., for over USD 23 billion – marking one of the largest potential deals in the history of aerospace industry.
Under the terms of agreement of the cash-and-stock purchase proposal, United Technologies will pay USD 140 per share for Rockwell Collins, by splitting it into USD 93.33 per in cash and USD 46.67 in stock. The net deal price implies an overall transaction value of USD 30 billion as United Technologies has agreed to take over USD 7 billion of Rockwell Collins’ debt.
Speaking of this potential megadeal, industry experts speculate this acquisition to enhance customer value by making aircrafts more connected and intelligent. The consolidation within the aerospace industry is also expected to give the combined new unit a greater high by strengthening technologically advanced aerospace systems. Upon completion of this deal, it has been forecast that Rockwell Collins and United Technologies Aerospace systems will be integrated to form a new business unit called Collins Aerospace Systems, which will be headed by Kelly Ortberg – Rockwell’s current Chief Executive Officer. Dave Gitlin, who runs the United Technologies is expected to serve as the President and Chief Operating Officer for the new unit.
For the record, Rockwell Collins has a significant customer base that covers the world’s largest private-jet operators, airlines, and airports. Globally, Rockwell Collins is recognized as a leader in aviation and high-integrity solution market as it provides flight controls, leading-edge avionics, aircraft interior, and data connectivity solutions. The company has a market value of more than USD 21 billion. United Technologies, on other hand provides smart, sustainable, and high technology products & services to the aerospace industry, and is a significant player in the United States aircraft landing gear systems market. The company makes Pratt & Whitney jet engines used by Bombardier Inc, Airbus, Embraer SA and other plane makers. It also supplies engine covers, landing gear, air conditioning systems to several jetliners.
With this acquisition, both the companies are trying to increase their bets on the aerospace, as other leading plane makers such as Airbus SE and Boeing Co. are trying to garner more profits. In a bid to acquire high-margin aftermarket arena for parts and services, these plane makers are pushing suppliers like United Technologies to lower prices of aviation products. However, by analyzing the wave of consolidation amongst the aerospace manufacturers, analysts predict companies like United Technologies to gain some leverage to fight such pressure built by the plane makers.
United Technologies expects this acquisition to add profits after the first year of purchase. Moreover, by fourth year, the company also expects to generate over USD 500 million in yearly pretax savings and other advantages.
The deal is expected to be close in the third quarter of 2018, subject to some customary conditions and regulatory & shareholder approvals.
Ojaswita Kutepatil develops content for Market Size Forecasters. A mechanical engineer by qualification, worked as a BDE and Technical Engineer before switching her profession to content writing. As an Associate Content writer, where she pens down write-ups pertaining to the market research industry...