United Technologies Tops Dow After Honeywell Deal Talksby
Talks stalled on concerns regulators and customers would balk
`No path forward that we could see,' CEO Gregory Hayes says
United Technologies Corp. was the top gainer in the Dow Jones Industrial Average a day after Honeywell International Inc. acknowledged holding talks of a possible merger.
Combining the aerospace giants would benefit shareholders and create a robust company with a broad set of product offerings, Honeywell said late Tuesday in its first comment on the potential tie-up. Honeywell said it identified as much as $3.5 billion in cost savings if a deal went through.
After almost a year of overtures, discussions stalled on United Technologies’ concerns that an agreement would run afoul of antitrust authorities and that customers would resist the combination. Gregory Hayes, chief executive officer of United Technologies, said in a televised interview Tuesday that “there’s just no path forward that we could see.”
The proposal failed to win the support of the world’s largest airplane makers, with Airbus Group SE telling the Financial Times on Wednesday that it opposed combining two large aerospace suppliers. Boeing Co. said in a statement that it would take “a very close look” at any deal in the interest of ensuring “healthy competition in our supply chain.”
Honeywell last week offered $108 a share for United Technologies, or about 22 percent more than the stock price at the time, a person familiar with the matter said. The two companies have combined annual revenue in excess of $90 billion, selling wares spanning jet engines, thermostats and elevators.
The positive comments from Honeywell about a merger come as United Technologies is facing sluggish growth, heavy costs related to development of a Pratt & Whitney jet engine and headwinds in its Otis elevator business. A strong U.S. dollar is also weighing on the company, whose shares fell 16 percent last year.
United Technologies rose 2.2 percent to $93.61 at the close in New York. Honeywell shares fell less than 1 percent to $103.30.