United Technologies Is Said to Assess Sale of Pumps Business
Feb. 9 (Bloomberg) -- United Technologies Corp. is studying the sale of a pump- and compressor-making division to raise cash for the planned purchase of aerospace supplier Goodrich Corp. (GR), people with knowledge of the matter said.
Goldman Sachs Group Inc. is advising on the potential divestiture of some or all of that business, which is part of the Hamilton Sundstrand unit, said the people, who spoke on condition of anonymity because the talks are private. The company may decide not to go ahead with a sale, which may value the unit at $2 billion or more, the people said.
The industrial products unit, which makes Milton Roy pumps and Sullair compressors, is among the few at United Technologies not focused on aviation or commercial buildings. Executives have been weighing asset sales to limit the amount of stock needed for the $16.5 billion cash purchase that will add Goodrich to the maker of Otis Elevators and Sikorsky helicopters.
“There’s absolutely no synergies I can really think of between one of those Sullair compressors on two wheels at a construction project and anything else they do,” said Brian Langenberg, an analyst at Langenberg & Co. in Chicago.
Potential buyers may include construction-equipment makers betting on a rebound in the non-residential market, Langenberg said yesterday in a telephone interview. Hartford, Connecticut- based United Technologies may be able to raise $1 billion more by selling assets in its fire and security unit, he added.
Also under way is an effort to find a buyer for Rocketdyne, a maker of engines for civilian and military rockets, the people said. Deutsche Bank AG and Moelis & Co. are advising on that sale, which may raise $400 million or more, the people said.
John Moran, a spokesman for United Technologies, declined to comment. Spokesmen for Goldman Sachs, Moelis and Deutsche Bank also declined to comment.
United Technologies acquired most of the industrial- products business in the 1999 purchase of Sundstrand Corp. The unit’s annual sales probably exceed $1 billion, according to estimates from analysts such as Robert Stallard at RBC Capital Markets.
Rocketdyne, a part of the Pratt & Whitney unit, typically reports $700 million to $800 million in revenue, based on presentations and filings. Rocketdyne President Jim Maser said last year that the unit got about 60 percent of its revenue from NASA, which flew the last space shuttle mission in 2011.
Chief Financial Officer Greg Hayes said at an investor conference in New York yesterday that United Technologies was “actively working with some banks and some potential buyers” on asset sales, without specifying the assets under review.
The shares rose 2.5 percent to $83.78 at the close in New York. That was the biggest jump in four weeks and the largest advance among the 30 companies in the Dow Jones Industrial Average.
The company agreed to buy Goodrich in September. Goodrich and Hamilton Sundstrand will be combined into a new unit, UTC Aerospace Systems, and be based in Goodrich’s hometown of Charlotte, North Carolina.
Chief Executive Officer Louis Chenevert’s plan at the time called for financing about 25 percent of the deal with stock and the rest with new debt. Since then, executives have discussed the idea of selling assets to shrink the equity portion.
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