U.S. industrial conglomerate United Technologies Corp. rejected today a $90.7 billion offer by rival aerospace supplier Honeywell International Inc., saying that pursuing a merger would be “irresponsible” toward its shareholders, Reuters reports.
“We concluded that a combination would be blocked outright or, even if it were possible to complete a transaction, the regulatory delay, required divestitures, and customer concerns and concessions would ultimately destroy shareholder value far beyond any synergies,” United Technologies says in a regulatory filing.
“It would be irresponsible for UTC to move forward with the proposed combination,” it says.
Honeywell, which has a facility in Baton Rouge, said earlier today it has offered to buy United Technologies Corp. for about $90.7 billion, putting pressure on the reluctant aerospace supplier to come to the negotiating table.
A combined company would have almost $100 billion in annual sales, and double-digit earnings growth after they slash costs, according to a presentation by Honeywell Chief Executive Officer David Cote to United Tech’s top executives last week and made public today.
United Tech shares, part of the Dow Jones industrial average, turned lower in afternoon trading, down 0.8% to $97.36. That is well below Honeywell’s $108 per share offer, suggesting Wall Street, like United Tech, was skeptical about the combination.
United Tech is the parent company of Otis elevators, Carrier air conditioners and Pratt & Whitney jet engines, while Honeywell makes thermostats, auto turbochargers and airplane cockpit electronics.
Areas of overlap between the companies include small aircraft engines, airplane power units and environmental systems as well as wheels and brakes, CRT Capital analyst Peter Arment says in a note to clients.
Honeywell would likely have to divest many assets and raise its offer before a deal was done, Arment adds. U.S. and European regulatory scrutiny would push the deal’s completion well into 2017.
