Aerospace giants Honeywell (NYSE: HON) and United Technologies (NYSE: UTX) reportedly held talks about a merger recently with the potential to create a $94-billion U.S. sales colossus. However, United pulled out of the talks due to anti-trust worries.
Reports say the discussions occurred within the past two weeks and were focused on a deal in which Honeywell offered a premium, largely in stock with some cash, for the smaller United Technologies. The Wall Street Journal reported late on Monday that the bid was worth $10.00 U.S. per UTX share, with $42.00 U.S. of the offer in cash, and that UXT holders would have owned 40% of the combined company.
There were apparently significant concerns on the UTX side over whether any combination could pass an anti-trust review, given the two companies provide so much of what goes into an airplane and would likely face opposition from the likes of Boeing and Airbus.
The industrial logic of a combination has been a focus of current and previous managements at both companies. In October 2000, UTX was close to a deal to buy Honeywell — only to watch that deal trumped by an offer from GE, which after opposition from EU regulators found itself unable to close the transaction.
The two companies are leaders in aviation and aerospace, where UTX's Pratt & Whitney makes aircraft engines and both companies provide the avionics and other systems that let airplanes fly. They are also both large players in the climate control business. Given their respective market shares, any combination would be expected to face a significant antitrust review not just in the U.S., but in Europe as well.
UTX stock opened Tuesday trading down 57 cents from Monday's close, at $91.80 U.S., within a 52-week trading range of $83.39 U.S. to $124.33 U.S., while Honeywell opened Tuesday down six cents at $104.51 U.S., within a 52-week range of $87.00 to $111.86 U.S.
