UTC Is in Talks to Buy Goodrich
United Technologies Corp. is in talks to acquire aircraft-systems maker Goodrich Corp., people familiar with the matter said, a deal that would expand the conglomerate's aerospace business amid a boom in production of passenger planes.
The talks were advanced enough that United Technologies has had serious discussions with banks about securing $15 billion in financing for a deal, the people said Saturday.
Prices terms are unavailable, and no deal had been signed. United Technologies, which has been open this year about its interest in growing through acquisitions, is also looking at other potential targets. Goodrich, which had a market capitalization of around $11.6 billion at Friday's close, produces landing, interior and electronic systems for airplanes, while the company's defense business that accounts for a third of sales is growing despite Pentagon cuts, a rarity in the sector. The company booked $578.7 million in profit last year on $7 billion in revenue. Its results have been helped by a strong rise in demand for commercial aviation systems, as Airbus and Boeing Co. boost production rates, and a host of new aircraft are set to be launched over the next five years. Goodrich expects its revenue to grow to $8.1 billion this year.
United Technologies which makes Pratt & Whitney aircraft engines, Sikorsky helicopters, Otis elevators and Carrrier heating and cooling systems has a market value of some $68.6 billion.
The most important thing that going to happen if this deal became true is buying Goodrich would further diversify the conglomerate away from businesses tied to the struggling construction industry.
The stock spiked on reports of a deal, however. Goodrich shares rose 22% to $113 in after-hours trading Friday, having ended the session up 7.4% at $92.89.
On a call to discuss United Technologies' second-quarter earnings in July, Chief Financial Officer Greg Hayes said the company "has the appetite and capacity for large acquisitions." Two years ago, the company agreed to buy General Electric Co.'s security business for $1.8 billion.
Everyone is waiting for the true numbers, and signed or refused papers. It will be a huge deal inside this industry, because this deal may cause a huge difference in the industry's prices, deals and suppliers.
By Saoud Sulaymani
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ReplyDeleteIt's an interesting topic, because it is talking about an extremely huge deal which rarely happens. A lot of diverse and stocks' prices changes are strongly expected by experts. But, Nobody knows when exactly Goodrich will respond the UTC's offer
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