United Technologies Corp. (UTX) Chief Executive Officer Louis Chenevert’s pursuit of Goodrich Corp. (GR) started in a conversation with CEO Marshall Larsen and ended with a celebratory dinner at a Manhattan hotel.
At an industry gathering more than a year ago, “I said, ‘You know Marshall, I really ought to give you a call,’” Chenevert said yesterday in a telephone interview.
Directors at the companies ratified the $16.5 billion deal late yesterday. Products such as landing gear and engine casings, a focus on commercial aviation over military sales and the 63-year-old Larsen’s track record had made Goodrich a coveted target before Chenevert became CEO at Hartford, Connecticut-based United Technologies in 2008.
“This was my window,” said Chenevert, 54. Larsen is “the right age. Goodrich was the right property.”
Chenevert didn’t elaborate in the interview on the industry event where he broached the idea of a tie-up to Larsen, saying only that it was “one of the venues where we were with basically aerospace players.
“I’ve known Marshall for a long time. I think he knew of the interest of UTC in the company even before I was the CEO,” Chenevert said. Once the two sides began talking, the discussions continued, even though there was no opportunity to “really bring it home earlier.”
The CEOs “felt the culture would be very similar, and that was important to me,” Chenevert said in the interview. “I was relentless to the point where things accelerated and came to conclusion last evening with board meetings on both sides.”
Some of the companies’ product lines are complementary, such as the Goodrich-made turbine casings, called nacelles, that are used to house jet engines built by United Technologies’ Pratt & Whitney unit, a business Chenevert used to run.
Goodrich generates only 25 percent of its sales from the U.S. government, according to data compiled by Bloomberg. That’s a plus as United Technologies works to take advantage of record jetliner production and the military curbs spending.
When Chenevert started wooing Larsen about a year ago, he was seeking to avoid a repeat of one of the company’s last attempts at an acquisition, the unsolicited offer for automated teller machine-maker Diebold Inc., said a person with knowledge of the matter. United Technologies failed to persuade Diebold’s board to accept an offer, and eventually dropped its pursuit.
In December of last year, Chenevert offered a little more than $100 a share for Goodrich, said two people with knowledge of the matter. The two sides haggled for months, and discussed whether it would make more sense to finance the deal with cash or stock.
By this week, the companies had a tentative agreement on a deal at $127.50 in cash, and United Technologies started a flurry of meetings to make a last-minute review of Goodrich’s books, the people with knowledge of the matter said.
At the St. Regis Hotel in New York, a favorite of United Technologies executives, Chenevert met for dinner on Sept. 20 with Larsen and confirmed that he would proceed with the $127.50 price, the people said.
A key advocate for the acquisition within United Technologies was Bill Brown, whom Chenevert tapped as his new corporate strategy head in March, one of the people said. Brown had completed more than 40 acquisitions in his previous post, running UTC Fire & Security.
“I felt to get a larger transaction done, I needed somebody by my side that had superb deal experience,” Chenevert said yesterday in an interview. “When you do small deals, it kind of happens in the business units. When you get a public company like this one, there’s a lot more complexity to it.”
Brown wasn’t immediately available for an interview yesterday, the company said.
“It really became a team effort between Bill and my senior staff,” Chenevert said. Brown was “the catalyst to make sure we had the right data in front of us, and pushed the right agenda.”
Also on that team were Chief Financial Officer Greg Hayes, General Counsel Charles Gill and Thomas Bowler, senior vice president of human resources, Chenevert said.
“They’ve been superb,” Chenevert said. “They know me, they know my style, they know the high bar, and you know we just chugged along. I was relentless and we got it done.”
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