boeing objects to united technologiesrockwell collins tieup
Last Updated : GMT 09:40:38
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Last Updated : GMT 09:40:38
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about the merger of US-based industrial conglomerate

Boeing objects to United Technologies-Rockwell Collins tie-up

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Themuslimchronicle, themuslimchronicleBoeing objects to United Technologies-Rockwell Collins tie-up

Boeing
Washington - Muslimchronicle

Aerospace giant Boeing raised concerns Tuesday about the merger of US-based industrial conglomerate United Technologies and aviation equipment supplier Rockwell Collins, saying it could use its weight with regulators to scrutinize the deal.

Boeing said it was concerned the deal announced Monday would not be in the best interests of the company. 

"We intend to take a hard look at the proposed combination of United Technologies and Rockwell Collins," Boeing said in a statement.

The company said it was "skeptical" about whether the deal between two major suppliers to the aerospace industry "would be in the best interest of -- or add value to -- our customers and industry."

If Boeing decides the merger is "inconsistent with those interests, we would intend to exercise our contractual rights and pursue the appropriate regulatory options to protect our interests."

In the $30 billion deal, including debt, United Technologies (UTC) will offer $140 per share to Rockwell Collins, or $23 billion in addition to debt recovery.

A UTC spokeswoman declined to comment directly on Boeing's statement, pointing to comments from executives on a conference call Tuesday in which they characterized the transaction as a win for customers.

UTC Chairman and CEO Greg Hayes said any concessions to customers on existing contracts would not be significant and that the deal on the whole would in fact be a winner for these companies.

"Imagine the ability to combine these systems, architecture to reduce weight, to reduce cost for the airlines, those are the things that I think they're going to be interested in as opposed to simply the scale of these combined businesses," Hayes told analysts.

- 'Not eliminating competition' -

Hayes said the Rockwell deal involved much less overlap between the two companies compared with a proposed $90 billion takeover of Honeywell that fizzled in 2016 and was reportedly opposed by Boeing and Airbus.

"You'll recall with Honeywell, they were somewhere between $8 billion and $10 billion of product overlap on the aerospace side. For this combination, we're talking only a couple of hundred million dollars overlap, so there is not big divestiture risk," Hayes said.

"This is not like we're eliminating any competition anywhere across the business."

United Technologies, headquartered in Farmington, Connecticut, employs more than 200,000 people and had 2016 revenues of $57.2 billion.

Rockwell Collins, based in Cedar Rapids, Iowa, manufactures electronic equipment for cockpits and cabins. It had 2016 revenues of $5.3 billion and employs 19,000 people. Last year, it acquired the American group B/E Aerospace for $6.4 billion.

The deal comes as aircraft manufacturers are pressuring subcontractors to lower prices on equipment.

source: AFP

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