United Technologies’ deal to buy aerospace company Rockwell Collins will mean new leadership for a Charlotte-based business unit, but it’s unclear if the headquarters will change or what cost-cutting plans could mean to employees.
The Connecticut-based industrial conglomerate announced Monday that it was acquiring Cedar Rapids, Iowa-based Rockwell Collins for $22.75 billion to add to its aerospace capabilities. That’s a business that United Technologies has based here since buying Charlotte-based Goodrich in 2012 and forming UTC Aerospace Systems.
After completion of the deal, UTC Aerospace Systems and Rockwell Collins will be combined to create a new business unit called Collins Aerospace Systems, the companies said. Rockwell Collins CEO Kelly Ortberg will become the unit’s CEO, with Dave Gitlin, president of UTC Aerospace Systems, serving as president and chief operating officer.
UTC Aerospace Systems has said it employs about 300 at its headquarters in Charlotte, plus about 200 in Monroe.
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A United Technologies spokesman said no final decision has been made on where the combined unit will be based. The companies said they expect the deal to eventually generate $500 million in annual pretax savings, but in a call with analysts Tuesday morning executives from the two companies did not provide details.
“(The deal) creates a lot of uncertainty, but most of all, it creates a lot of opportunity,” for shareholders, customers and employees, United Technologies CEO Greg Hayes said in the call.
Hayes called the Rockwell deal a “transformational acquisition” for the company, which makes Otis elevators and Pratt & Whitney engines. Acquiring Rockwell – which makes flight deck avionics, cabin electronics and cabin interiors for commercial and military customers – increases United Technologies’ exposure in the commercial air and space industry, he added.
“(The deal) gives us the scale to do things we couldn’t do on our own,” Hayes said.
United Technologies is paying $140 per share in cash and stock for Rockwell Collins, a 9.4 percent premium over Tuesday’s closing price, when reports of a deal surfaced. Including debt, the acquisition is worth $30 billion.
“We all recognize that the landscape in commercial air and space gets more competitive every day,” Hayes said. “The long-term prospects are solid.”
The companies expect the deal to close by the third quarter of 2018, subject to approval from Rockwell Collins shareholders and regulators. United Technologies on Monday also reaffirmed its 2017 profit estimates.
In trading Tuesday morning, United Technologies’ shares fell more than 3 percent to $113.78, while Rockwell Collins shares were up .72 percent to $131.55.
The Associated Press contributed.