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United Technologies Is Breaking Itself Up Into 3 Companies

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United Technologies Is Breaking Itself Up Into 3 Companies

United Technologies Corporation (NYSE: UTX) traded marginally higher Tuesday morning after announcing a plan to split its commercial business into three distinct entities.

The break-up, which follows a recent acquisition of Rockwell Collins, Inc. (NYSE: COL), will yield the following:

  • Aerospace and defense supplier United Technologies, combining Pratt & Whitney with the newly formed Collins Aerospace Systems (a union of UTC Aerospace Systems and Rockwell Collins);
  • Elevator and escalator manufacturer Otis; and
  • Carrier — an HVAC, refrigeration, security, fire safety and building automation supplier.

The current proposal involves spinoffs of Otis and Carrier from the core United Technologies, which itself is seen to be accretive to adjusted earnings per share in 2019.

"Our decision to separate United Technologies is a pivotal moment in our history and will best position each independent company to drive sustained growth, lead its industry in innovation and customer focus, and maximize value creation," United Technologies chairman and CEO Gregory Hayes said in a press release.

The independent segments boasted 2017 sales of $39 billion, $12.3 billion and $17.8 billion, respectively. They are together expected to contribute a quarterly dividend of 73.5 cents per share until the separations are completed.

Management expects plan completion in 2020 with breakup activity in the next 18 to 24 months. Hayes will remain as UTC chairman and CEO.

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