DealZone

Final chapter of an aviation flirtation?

November 18, 2009

Throughout 2009, United Technologies Corp Chief Executive Louis Chenevert’s mantra was that the diversified U.S. manufacturer was a “willing buyer” with a $2 billion takeover budget and that all it needed was to find a “willing seller.”

Its deal last week to buy General Electric Co’s security business for $1.82 billion answered the question of what the world’s largest maker of elevators and air conditioners was going to do with its M&A budget.

But one question was left unanswered — what of Textron Inc’s Bell helicopter unit? An executive at United Tech’s Sikorsky arm in March said that a merger with Bell was an “interesting hypothesis.”

Textron never commented on the idea.

Shareholders may have gotten their answer to that question on Wednesday.

“There aren’t many helicopter manufacturers out there and the ones that are out there aren’t selling,” Greg Hayes, United Tech’s chief financial officer, told investors, when asked about where the Hartford, Connecticut-based company would be focusing its M&A energy. Greg Hayes

Once United Tech closes its takeover of GE’s security arm — which will be its biggest deal since 2005, when it bought Kidde — the company is probably “pretty much done” making big buys in that sector.

It remains interested, however, in smaller, so-called “bolt-on” deals in security, as well as control makers in the heating, ventilation and air conditioning area.

The security deal represented something of an M&A rapprochement between the two Connecticut industrial titans — it was the first major sale of a unit from one to the other since GE tried to box out United Tech in a bid for Honeywell International Inc, which was ultimately quashed by regulators.

But United Tech doesn’t expect a flurry of other unit sales to follow — a merger of GE’s jet engine business and United Tech’s Pratt & Whitney unit, for example, is not in the cards.

“I don’t think GE’s going to sell their business to us, not that I could afford it, probably,” Hayes said.

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