Rockwell Collins likely to get bought by United TechnologiesOther
August 31, 2017
According to a report in the Wall Street Journal online this week, United Technologies Corp. of Farmington, Connecticut, a designer of engines and other aircraft parts is close to signing a deal to acquire Rockwell Collins of Cedar Rapids, Iowa, a producer of avionics for commercial and military aircraft, for an excess of $20 billion.
The deal would be the largest aerospace deal ever, topping the 2012 purchase of Goodrich Corp. by United Technologies for approximately $16.5 billion, according to the Wall Street Journal. It would also affect the military embedded electronics market as Rockwell Collins is a leader in not only avionics, but simulation and training systems as well as military communications from radios to GPS devices.
Rockwell Collins made a big acquisition of their own of B/E Aerospace for just over $6 billion. See our coverage here.
The markets quite liked the news of an impending deal. "Rockwell shares rose on the news...closing up 2.1 percent at $130.74 and giving the company a market value of about $21 billion. United Technologies, meanwhile, jumped 2.9 percent to $118.70, giving the industrial conglomerate a market value of about $95 billion," stated the Wall Street Journal article.
Were it to go through and meet regulatory approval, I think the merger would be good for Rockwell Collins as there is not much overlap between the two companies so there will not likely be redundancy concerns with the technology and the added capital of United Technologies will hopefully enable the Iowa company to invest more internal research and development dollars. This is especially crucial in the military market where the government is spending less and less to fund military system development from the ground up, preferring industry to spend that money and present their military customer with more finished products.
The merger should also be good news for the embedded electronics suppliers as Rockwell Collins leverages much commercial-off-the-shelf (COTS) hardware and software for their avionics and radio platforms.
Apparently the merger with United Technologies would also strengthen Rockwell Collins competitive stance with its main rival, Honeywell Aerospace in Phoenix. Interestingly, United Technologies resisted takeover efforts last year from Honeywell Aerospace, the parent of Honeywell Aerospace, according to The Wall Street Journal article, which can be viewed here.
For more coverage of Rockwell Collins see the following articles:
U.S. Army selects Rockwell Collins for HMS Manpack radio follow-on contract
Demand rising for military simulation & training tech, virtual reality tools, and head-worn displays