Market Overview

What Analysts Expect From The United Technologies-Rockwell Collins Merger

Share:
What Analysts Expect From The United Technologies-Rockwell Collins Merger
Related UTX
Q2 13F Roundup: How Buffett, Einhorn, Loeb And Others Adjusted Their Portfolio
A Running List Of The Companies Blaming Trade Policy For Stifled Earnings, Guidance
United Technologies's unit to acquire S2 Security (Seeking Alpha)
Related COL
Earnings Scheduled For April 27, 2018
A Peek Into The Markets: U.S. Stock Futures Climb Ahead Of GDP Report
K— Principal Fund, L.p. Buys Pure Acquisition Unit, Pure Acquisition Unit, Far Point ... (GuruFocus)

United Technologies Corporation (NYSE: UTX) officially announced its long-rumored $30 billion buyout of Rockwell Collins, Inc. (NYSE: COL). United will pay $93.33 in cash and $46.67 in United stock, a combined takeout price of $140 per share.

United announced that Rockwell Collins will be merged with the company’s existing Aerospace Systems unit to form a new entity called Collins Aerospace Systems. According to Bank of America analyst Ronald Epstein, the fact that Rockwell Collins CEO Kelly Ortberg will hold the title of CEO of Collins Aerospace Systems suggests the possibility of a spinoff down the line.

“The Wall Street Journal has suggested a spin-off in the future, and the new titles may support this view,” Ortberg wrote on Tuesday.

Investors don’t seem to like the details of the deal, sending United stock down more than 4 percent on Tuesday. Canaccord Genuity analyst Ken Herbert praised the deal in a new note to clients.

“We believe the acquisition will create the largest tier 1 aerospace supplier, with important positions on all major programs,” Herbert wrote on Tuesday. He acknowledged that the $140 price tag representing 14.5x projected fiscal 2018 EBITDA is steep, but pointed out that United management expects the deal to be accretive in the very first year. In fact, United expects synergies in excess of $500 million within four years of the deal’s completion.

Prior to completion, the merger must be approved by Rockwell Collins shareholders and regulators, but Herbert said he doesn’t see any major reason for the deal to be rejected.

Bank of America maintains a Buy rating and $140 price target for United Technologies.

Related Link: Aerospace Mega-Deal: United Technologies Buys Out Rockwell Collins For $30 Billion

_______
Image Credit: http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons">

Latest Ratings for UTX

DateFirmActionFromTo
Jun 2018Morgan StanleyReinstatesOverweightOverweight
May 2018Daiwa CapitalUpgradesNeutralOutperform
Apr 2018Stifel NicolausMaintainsHoldHold

View More Analyst Ratings for UTX
View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Reiteration Travel M&A Analyst Ratings Tech Best of Benzinga

 

Related Articles (COL + UTX)

View Comments and Join the Discussion!

Steve Cohen's 'Comeback' Draws Closer

12 Biggest Mid-Day Losers For Tuesday