Honeywell Doesn’t See Regulatory Obstacles to a United Tech Deal

United Technologies Corp. and Honeywell International Inc. took opposite tacks Tuesday in explaining how merger talks between the two corporate giants collapsed.

United Technologies shares fell 0.5 per cent to US$91.91 in morning trade, while Honeywell rose 0.1 per cent to US$104.71.

“The last thing I want to do is decimate my company the way Honeywell was decimated after the failed merger with GE”, he said.

But later that day, United Tech acknowledged that “preliminary, exploratory conversations” had been held.

“Management and the United Technologies Board continues to believe that its brand of components and generate global size and continue to generate strong cash flow throughout the economic cycle, and that its activities are well positioned to clear the long-term value for its shareholders, “the statement concluded”.

UTX also had serious concerns regarding the reaction it would face from its largest customers, especially in the aerospace industry.

United Technologies and Honeywell have “tremendous” overlap between their businesses, and getting regulatory approval to merge would be “very hard”, Hayes said. In comparison, United Technologies has been down by 28% due to a stronger dollar and high development costs at its airplane engine division, Pratt & Whitney.

If this transaction materialised, it would combine two entitites that manufacture elevators and jet engines. The company said its proposed deal would create $3.5 billion in savings and benefit customers, but also said it wouldn’t overpay to get its rival to the negotiating table. “There’s just no path forward that we could see”.

United Technologies has transformed its portfolio in the past four years, beginning with the Goodrich purchase.

UTC was on the verge of a deal to buy Honeywell in 2000 for $41 billion, when General Electric trumped the offer by $1 billion at the last minute. Hayes reached an agreement in July to sell the Sikorsky helicopter unit to Lockheed Martin Corp. for $9 billion.

According to CNBC, is that Honeywell would have initiated the latest discussions but United Technologies had his side approached Honeywell before.