(Reuters) - Aerospace supplier United Technologies Corp (UTX.N) has struck a $30 billion agreement to buy avionics and interiors maker Rockwell Collins Inc COL.N, the companies said on Monday, in a deal that bulks up UTC’s power with plane makers by creating one of the world’s largest makers of civilian and defense aircraft components.

Farmington, Connecticut-based United Technologies will pay $140 per share for Rockwell Collins, split between $93.33 per in cash and $46.67 in stock, according to the companies. The price represents a 17.6 percent premium to Rockwell’s $119 share price before news of the talks emerged on Aug. 4.

Shares of Cedar Rapids, Iowa-based Rockwell Collins closed at $130.61 on Friday. U.S. markets were closed on Monday for the Labor Day holiday.

The acquisition price implies a total transaction value of $30 billion, including Rockwell Collins’ debt, and a total equity value of $23 billion. United Tech said it plans to fund the cash portion through debt issuances and cash on hand.

Under the deal, the companies said that Rockwell Collins and UTC’s aerospace systems segment will be combined to create a new business unit named Collins Aerospace Systems.

“This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” UTC’s chairman and chief executive officer, Greg Hayes, said in the statement.

“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,” he said.

SUPPLIERS VS PLANEMAKERS

The creation of a new giant in the top echelon of aircraft parts makers comes as planemakers Boeing Co (BA.N) and Airbus SE (AIR.PA) are trying to capture more of the profits earned by their suppliers. Both are pushing suppliers to lower prices and are moving into the high-margin aftermarket arena for parts and services that suppliers now enjoy.

In a move seen as a threat to Rockwell, Boeing said in July that it would build up its own avionics business.

Last week, Airbus urged supplier UTC to stay focused on fixing industrial problems that have delayed new aircraft deliveries.

If plane makers “are going to take more of the aftermarket or demand more of the aftermarket, we’re going to have to think about how we price our products,” Hayes told analysts in July.

FILE PHOTO - The ticker symbol for United Technologies is displayed on a screen on the floor of the New York Stock Exchange July 20, 2015. REUTERS/Brendan McDermid

By making more of the components needed on each aircraft, analysts say, United Technologies likely will gain some leverage to resist such pressures.

The deal also follows a wave of consolidation among smaller aerospace manufacturers in recent years that was caused in part by the need to invest in new technologies such as metal 3-D printing and connected factories to stay competitive. A combined United Technologies and Rockwell Collins could similarly invest, and their broad portfolios have little overlap.

United Technologies makes Pratt & Whitney jet engines used by Airbus, Bombardier Inc (BBDb.TO), Embraer SA (EMBR3.SA) and other plane makers. It supplies engines for Lockheed Martin Corp’s (LMT.N) F-35 Joint Strike Fighter. It also supplies such key components as landing gear, air conditioning systems and engine covers to a wide range of jetliners.

Rockwell Collins is a major avionics supplier to Boeing and Airbus and other plane makers. In April it added passenger seating, cabin interiors, lavatories and galleys through its $6.4 billion acquisition of B/E Aerospace.

The two companies have spent a month trying to reach an agreement, and their combined sales would be more than $62 billion, compared with about $95 billion for Boeing.

United Technologies expects to close the purchase in the third quarter of 2018. The company, with a $94.2 billion market value, also owns Otis Elevator and air conditioner maker Carrier.

Rockwell Collins has a market value of $21.2 billion.

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The deal, which includes $7 billion in Rockwell’s debt, is expected to save more than $500 million by the fourth year after its completion, the companies said.

Morgan Stanley & Co LLC was the financial adviser to United Tech, and Wachtell, Lipton, Rosen & Katz was its legal adviser.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc were Rockwell’s financial advisers, while Skadden, Arps, Slate, Meagher & Flom was its legal adviser.</s>Industrial conglomerate United Technologies Corp. reached a deal to buy airplane-parts maker Rockwell Collins Inc. for $23 billion, in the biggest aerospace deal in history.

Both companies’ boards have approved a deal in which United Technologies will pay $140 a share in cash and stock, the companies said late Monday. Rockwell investors will get...</s>Jet-engine maker United Technologies Corp has agreed to buy aircraft parts manufacturer Rockwell Collins Inc for US$30 billion, the companies said.

REUTERS: Jet-engine maker United Technologies Corp has agreed to buy aircraft parts manufacturer Rockwell Collins Inc for US$30 billion, the companies said.

Under the deal, Rockwell shareholders will receive US$140 per share in stock and cash, split between US$93.33 in cash and US$46.67 in United Tech stock, the companies said in a statement.</s>NEW YORK (AP) — United Technologies plans to boost its aerospace business by paying $22.75 billion for flight deck maker Rockwell Collins.

United Tech said it will combine its aerospace unit with Rockwell Collins and rename it Collins Aerospace Systems. That unit, which United Tech expects to bring in more than $23 billion in sales a year, will make airplane seats, landing systems and other parts for commercial and military planes. The buyout comes about five months after Rockwell Collins completed a deal to buy rival B/E Aerospace for more than $6 billion. Besides its aerospace business, Farmington, Connecticut-based United Tech also makes Otis elevators and Carrier air conditioners.

United Tech said Monday that it will pay $140 per share in cash and stock for Cedar Rapids, Iowa-based Rockwell Collins Inc. Including debt, the companies said the acquisition is worth $30 billion.

United Technologies Corp. called the businesses complementary and expects $500 million in pretax savings related to the deal. It reaffirmed its 2017 profit estimates.

The companies expect the deal, which needs to be approved by regulators and Rockwell Collins shareholders, to be completed within a year.

In morning trading, shares of United Technologies slipped $4.13, or 3.5 percent, to $113.79. Rockwell Collins shares added 96 cents to $131.57. The stock is up about 55 percent in the past year.</s>NEW YORK (AP) - United Technologies plans to boost its aerospace business by paying $22.75 billion for flight deck maker Rockwell Collins.

United Tech said it will combine its aerospace unit with Rockwell Collins and rename it Collins Aerospace Systems. That unit, which United Tech expects to bring in more than $23 billion in sales a year, will make airplane seats, landing systems and other parts for commercial and military planes. The buyout comes about five months after Rockwell Collins completed a deal to buy rival B/E Aerospace for more than $6 billion. Besides its aerospace business, Farmington, Connecticut-based United Tech also makes Otis elevators and Carrier air conditioners.

United Tech said Monday that it will pay $140 per share in cash and stock for Cedar Rapids, Iowa-based Rockwell Collins Inc. Including debt, the companies said the acquisition is worth $30 billion.

FILE - This Dec. 6, 2016, file photo shows the United Technologies Electronic Controls factory in Huntington, Ind. United Technologies is acquiring Rockwell Collins for $22.75 billion in order to expand its aerospace capabilities. United Tech, which makes Otis elevators and Pratt & Whitney engines, said Monday, Sept. 4, 2017, it's paying $140 per share in cash and stock for Rockwell Collins, a 9.4 premium over Tuesday's closing price, when reports of a deal surfaced. (AP Photo/Michael Conroy, File)

United Technologies Corp. called the businesses complementary and expects $500 million in pretax savings related to the deal. It reaffirmed its 2017 profit estimates.

The companies expect the deal, which needs to be approved by regulators and Rockwell Collins shareholders, to be completed within a year.

In morning trading, shares of United Technologies slipped $4.13, or 3.5 percent, to $113.79. Rockwell Collins shares added 96 cents to $131.57. The stock is up about 55 percent in the past year.</s>United Technologies Corp. agreed to buy Rockwell Collins Inc. for about $23 billion, creating an aerospace behemoth that can outfit warplanes and jetliners from tip to tail.

Rockwell Collins shareholders will receive $140 a share in cash and stock, the companies said in a statement Monday. Including net debt, the total deal value is about $30 billion.

The transaction, one of the biggest in aviation history, creates an aircraft-parts giant better positioned to withstand the squeeze from planemakers Boeing Co. and Airbus SE for pricing discounts and higher output. The combined company will boast a broad suite of products for commercial aircraft, from Rockwell Collins’s touchscreen cockpit displays to jet engines made by the Pratt & Whitney division of United Technologies.

The price of $140 a share represents an 18 percent premium to Rockwell Collins’s closing level on Aug. 4, before Bloomberg News reported on the deal talks. The Cedar Rapids, Iowa-based company closed at $130.61 on Sept. 1.

United Technologies said it will combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems.

Rockwell Collins Chief Executive Officer Kelly Ortberg will head the division, while Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.

The transaction tops United Technologies’ own $18 billion purchase of Goodrich Corp. in 2012. Billionaire Warren Buffett’s Berkshire Hathaway Inc. completed the biggest aerospace acquisition last year when it bought Precision Castparts Corp. for $37 billion, including debt.

 In the latest deal, United Technologies is increasing its bet on aerospace, where it has stumbled recently with the rocky rollout of a new jet engine that cost $10 billion to develop. The market accounts for about half of sales at the Farmington, Connecticut-based manufacturer, with the rest coming from elevators, air conditioners and other building systems.

When Chief Executive Officer Greg Hayes took the helm in 2014, he pledged to consider major moves, including deals potentially in excess of $20 billion. The company sold its Sikorsky helicopter business to Lockheed Martin Corp. for $9 billion in 2015. Hayes rejected a merger proposal in early 2016 from Honeywell International Inc., saying he didn’t believe antitrust regulators would have approved the $90 billion tie-up. Honeywell later abandoned the bid.

Rockwell Collins is already absorbing the largest acquisition in its history. The company earlier this year closed the acquisition of B/E Aerospace, adding deluxe jetliner seats, lavatories and galley equipment to a lineup of high-technology avionics products. That deal was valued at $8.6 billion including the assumption of debt.</s>United Technologies Corp. (UTC) and Rockwell Collins have reached a definitive agreement under which UTC will acquire Rockwell Collins for $23bn.

To read this article, go to Air & Cosmos International.</s>United Technologies has agreed to buy the airplane parts maker Rockwell Collins for $30 billion, including debt, establishing an aerospace industrial giant.

Under the terms of the deal, United Technologies, which supplies parts to Boeing and Airbus, will pay $140 a share in cash and stock, both companies said late Monday. Rockwell investors will receive $93.33 a share in cash and the remaining $46.67 in United Technologies stock.

The price is an 18 percent premium above where Rockwell’s stock was traded on Aug. 3, a day before news reports said United Technologies was considering a bid for Rockwell.

The transaction, one of the largest ever in the aerospace industry, is expected to close by the third quarter of 2018.

“This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” United Technologies’ chairman, Gregory J. Hayes, said in a statement.

Rockwell Collins produces electronics and avionics for aircraft, including the F-35 fighter jet. United Technologies is a deeply diverse business that includes the Otis escalator and elevator brands and Pratt & Whitney, which makes high-performance aircraft engines.</s>Industrial conglomerate United Technologies Corp. reached a deal to buy airplane-parts maker Rockwell Collins Inc. for $23 billion, in the biggest aerospace deal in history.

Both companies' boards have approved a deal in which United Technologies will pay $140 a share in cash and stock, according to people familiar with the matter. Rockwell investors will get $93.33 a share in cash and the remaining $46.67 in United Technologies stock, the people said.

The price is an 18% premium to where Rockwell traded before word of a potential deal first surfaced early last month, and 30% above where the stock ended July.

The deal would be the biggest aerospace deal ever, followed by United Technologies' 2012 acquisition of Goodrich Corp. for about $16.5 billion, according to Dealogic.

It promises to reshape the market for aerospace parts and could be a harbinger of a breakup of United Technologies in the years following integration, according to people familiar with the company's plans.

Industrial conglomerate United Technologies Corp. reached a deal to buy airplane-parts maker Rockwell Collins Inc. for $23 billion, in the biggest aerospace deal in history.

Both companies' boards have approved a deal in which United Technologies will pay $140 a share in cash and stock, the companies said late Monday. Rockwell investors will get $93.33 a share in cash and the remaining $46.67 in United Technologies stock.

The price is an 18% premium to where Rockwell traded before word of a potential deal first surfaced early last month, and 30% above where the stock ended July.

The deal would be the biggest aerospace deal ever, followed by United Technologies' 2012 acquisition of Goodrich Corp. for about $16.5 billion, according to Dealogic.

It promises to reshape the market for aerospace parts and could be a harbinger of a breakup of United Technologies in the years following integration, according to people familiar with the company's plans.

Rockwell is expected to give United Technologies a larger presence, and more leverage, in its business supplying Boeing Co. and Airbus SE as the aerospace industry ramps up for a new generation of jets. Those new jet plans are likely to be worth decades of business for the component makers such as United Technologies and Rockwell.

Farmington, Conn.-based United Technologies already owns one of the world's biggest jet-engine makers, Pratt & Whitney, and an aerospace division that also makes parts such as wheels and landing gear.

Rockwell specializes in cockpit displays and communications systems for passenger jets and the military. In April, the Cedar Rapids, Iowa, company closed its roughly $6 billion acquisition of B/E Aerospace Inc., a maker of plane seats and interiors.

United Technologies Chief Executive Greg Hayes will remain as CEO of the combined company, and Rockwell chief Kelly Ortberg will run a new business known as Collins Aerospace that will combine the parts businesses, the companies said.

The increased focus on aerospace for United Technologies could trigger further portfolio changes, the people said. The company also makes Carrier air conditioners and Otis elevators and is open to reviewing whether to break up in the coming years after the company pares its debt levels and squeezes out some $500 million in expected cost savings, the people said. There isn't a decision on whether any split will happen, they cautioned.

The cost savings are expected to come from eliminating the expenses of being a public company for Rockwell and duplicative sales expenses, but aren't expected to mean significant workforce cuts, the people said.

Mr. Hayes has proven willing to make large changes in the past. He took over as CEO in November 2014 and by July 2015 had reached a deal to sell the company's Sikorsky helicopter division.

Several Wall Street analysts have said the deal makes more sense if it provides a path to splintering the conglomerate.

Last year, United Technologies' aerospace and jet-engine businesses had about $29.4 billion in revenue, while its other businesses brought in about $28.7 billion. Rockwell Collins had sales of about $5.3 billion in the fiscal year ended in September. B/E Aerospace added another $2.9 billion.

As reports of the merger talks became public, financial analysts have said they don't expect significant antitrust issues, given that United Technologies and Rockwell make different airplane parts.

Aside from regulators, the companies may have to sell the deal to their customers, where there has been tension already.

Pratt & Whitney has struggled with production and the reliability of its new geared-turbofan jet engine that powers Airbus A320neo single-aisle planes. Airbus plane deliveries this year are running behind because of a dearth of engines.

Regarding a potential Rockwell deal, an Airbus spokesman recently said the airplane maker hoped "that any potential M&A would not distract [United Technologies] from their top operational priority."

United Technologies officials have said they expect the problems to be resolved this year and were expecting to meet engine delivery commitments.

While United Technologies has long eyed Rockwell, talks first began between the CEOs in May, according to some of the people familiar with the matter. While the companies don't see major hurdles to closing the deal, they don't expect the airplane makers to be happy with the combination and plan to start making their case for why it would be beneficial starting Tuesday, the people said.

Boeing and Airbus have also been nudging their way into the aftermarket business to capture some of the profit from selling and servicing parts -- putting them on a collision course with suppliers such as United Technologies.

United Technologies' Mr. Hayes has warned that such intrusions could disrupt the business model for jet engines and lead to high prices for equipment if aftermarket services are no longer guaranteed.

After trying to buy United Technologies last year, Honeywell International Inc. is reviewing whether to break off its aerospace division, the rival industrial giant's largest. Activist Third Point LLC has made a public push for a spinoff.

In Europe, engine maker and Pratt & Whitney rival Rolls-Royce Holdings PLC has activist ValueAct Capital Management LP on its board.

Tim Mahoney, president and CEO of Honeywell Aerospace, said last month that a combination of United Technologies and Rockwell Collins would"change the competitive landscape."

Write to David Benoit at david.benoit@wsj.com, Dana Mattioli at dana.mattioli@wsj.com and Thomas Gryta at thomas.gryta@wsj.com</s>Rockwell Collins has been sold for $30-billion to United Technologies. According to a release on the company's website, the two companies reached an agreement on Monday.

Rockwell Collins specializes in aviation and solutions for commercial and military customers. United Technologies is based in Farmington, Connecticut.

Rockwell Collins has 30,000 employees worldwide and had more than $5-billion in sales last year. The company was founded back in 1933 by Arthur Collins.

The two companies will be forming Collins Aerospace Systems. It is expected to have about 70,000 employees and generate about $23-billion in revenue.

“This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” said UTC Chairman and Chief Executive Officer Greg Hayes. “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.”

“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,” Hayes continued. “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.”



“We are extremely pleased to announce this compelling transaction with UTC which is a testament to the value we have created for Rockwell Collins’ employees, customers and shareowners,” said Kelly Ortberg, Chairman, President and Chief Executive Officer of Rockwell Collins. “The combination will enable us to compete more effectively for future business through continued investments in innovation, world-class integrated product offerings and the ability to retain the top talent in the industry. We look forward to the next chapter in Rockwell Collins’ long and proud history, as part of UTC.”

According to the agreement, each Rockwell Collins share owner will receive $93.33 per share in cash and $46.67 in shares of UTC common stock.

More can be read about the agreement here.
United Technologies Corp will buy airplane parts maker Rockwell Collins for USD$30 Billion, including seven billion in debt previously incurred by Rockwell Collins.