United Technologies Corp. won European Union approval to buy Goodrich Corp. for $16.5 billion, after it agreed to sell electrical power generation and small engine control units.
Rolls-Royce Holdings Plc must also be granted an option to buy Goodrich’s share of a joint venture to develop a lean-burn fuel nozzle for aircraft engines to eliminate regulators’ antitrust concerns over the deal, the European Commission said in an e-mailed statement today.
“The remedies ensure that competition and incentives to innovate remain strong in these high-technology markets, for the ultimate benefit of the aerospace industry customers,” said EU Competition Commissioner Joaquin Almunia.
The Goodrich deal is the largest aerospace acquisition on record, according to data compiled by Bloomberg, and adds the world’s largest maker of aircraft landing gear to United Technologies brands that include Pratt & Whitney jet engines and Sikorsky helicopters. The purchase has an enterprise value of $18.4 billion, including $1.9 billion in net debt, the companies said in a statement when they announced the deal in September.
United Technologies is required to sell Goodrich’s Electric Power Systems business, its Connecticut-based Pumps and Engine Controls business and its interest in Aero Engine Controls, a joint venture with Rolls-Royce, said John Moran, a spokesman for the Hartford, Connecticut-based company, in an e-mailed statement.
United Technologies said today it expects to close the acquisition this week.
While the Aero Engine Controls aftermarket business will remain with United Technologies, Rolls-Royce will have the ability to purchase it in the future, Moran said, without elaborating.
Rolls-Royce has already announced its intention to exercise the option to buy Goodrich out of the joint venture, the EU said in its statement.
EU regulators said they initially had concerns that rival engine suppliers such as Honeywell International Inc. and Williams International Corp. could lose access to components such as fuel nozzles and engine controls that they buy from Goodrich. The commission said it saw a risk that the combined company could use these supply relationships to benefit Pratt & Whitney.
The companies’ offer adequately addresses those concerns, the Brussels-based antitrust agency said in its statement.
Lisa Bottle and Andrew Martin, spokespeople for Charlotte, North Carolina-based Goodrich, didn’t immediately respond to an e-mail seeking comment.
United Technologies today cut its 2012 revenue forecast to $58 billion to $59 billion, from as much as $62 billion, as demand for Otis elevators and spare parts for Pratt & Whitney jet engines declined amid a slump in the global economy. It expects earnings this year of $5.25 to $5.35 a share, the company said today. That compares with a previous forecast of between $5.30 and $5.50.
United Technologies sold its Pratt & Whitney Rocketdyne unit to GenCorp Inc. for $550 million earlier this week to help for the Goodrich acquisition. The Hartford, Connecticut-based company raised $9.8 billion in May in the corporate bond market’s largest transaction since 2009, according to data compiled by Bloomberg. The company also plans to use about $3 billion in cash and issue $1.5 billion of mandatory convertible securities.