UTC, Honeywell merger deal comes to naught

United Technologies has ended the prospect of further ‘merger of equals’ talks with Honeywell, claiming ‘insurmountable regulatory obstacles and strong customer opposition’, according to the Financial Times newspaper.

UTC which manufacturers Pratt & Whitney aero engines and Otis elevators, confirmed it had engaged in ‘preliminary, exploratory conversations about a range of potential collaborative options’ with Honeywell, but said these options were not pursued.

Honeywell reportedly offered $108 per share to take over UTC, valuing the US defence contractor and manufacturing giant at about $90bn.

“United Technologies has communicated to Honeywell that combining two of the world’s largest players in the aerospace and commercial building segments would face insurmountable regulatory obstacles and strong customer opposition,” the Financial Times quoted the company as saying.

Such a deal could either be blocked outright or made conditional on significant divestitures after a “lengthy and disruptive review period that would destroy shareholder value”, it added.

UTC is understood to have first approached Honeywell last April last year. UTC’s advisors reportedly assessed that less than 5 per cent of target sales between the two companies overlapped which in their view posed limited regulatory risk.

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