November 23, 2018

UTC gets final approval for Rockwell Collins takeover

HBJ File Photo
HBJ File Photo
UTC's Farmington headquarters.
HBJ File Photo
Employees of UTC work on an engine.

Farmington-based United Technologies Corp. announced today that Chinese regulators have approved the conglomerate's $30 billion takeover of avionics company Rockwell Collins, wrapping up a more than year-long acquisition that some analysts feared would be bogged down by worsening relations between the U.S. and China.

Following the decision by China's State Administration for Market Regulation, the deal is set to close in roughly three business days, UTC said.

The agency — which had authority to review the buyout because both UTC and Iowa-based Rockwell have operations in China — was the last of the needed regulatory bodies to sign off on the merger.

The U.S. Department of Justice decided last month to let the buyout proceed but made its approval contingent on Rockwell selling off certain businesses that, when merged with UTC, would have threatened competition in certain manufacturing sectors.

China's decision arrived later than many UTC executives once expected.

The Justice Department rendered its ruling in October, not early to mid-September as anticipated, and there were concerns from some analysts that the mounting trade war between the U.S. and China could stall the deal for even longer.

In the end, however, deteriorating political links did not appear to weigh heavily on the outcome of the merger.

UTC officials have said they plan to merge Rockwell with UTC Aerospace Systems to create Collins Aerospace Systems, which will be organized into six "strategic business units." One of those units will be the legacy UTAS power and engine systems operation in Windsor Locks, with other business segments anchored in southern California, North Carolina, and Iowa.

Rockwell makes flight controls, aircraft interiors, and related products, while UTAS produces jet engine controls, aircraft landing gear, brakes, and similar equipment.

With the Rockwell Collins deal now complete, UTC will soon have to decide whether to carry on in its present form or break up into different businesses.

Several major investors are pressuring UTC to split into three separate entities — Collins Aerospace Systems, Otis Elevator, and a climate, controls, and security company that would include Florida-based Carrier Corp.

UTC Chairman and CEO Gregory Hayes said in October that the combination of Rockwell and UTAS gives some executives confidence that the aerospace business could eventually stand on its own but also noted that any decisions would have to wait until after the Rockwell deal closed.

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