With Aerospace Squared Away, Will United Technologies Go Back To Big Deals?
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, Apr. 25, 5:07 PM
Tue, Apr. 12, 9:11 AM
- Pratt & Whitney (NYSE:UTX) has won an additional $1.04B contract for F-35 fighter jet engines, bringing the total value of its work on a ninth batch of the engines to $1.4B.
- The contract includes 53 conventional takeoff and landing engines and 13 short takeoff and vertical landing propulsion systems for the U.S. and five other countries (Italy, Norway, Israel, Japan and Britain).
- To date, Pratt & Whitney has delivered 273 production engines for the advanced new stealth fighter.
- Now read United Technologies: No Longer A Bargain
Thu, Mar. 31, 2:27 PM
- United Technologies' (UTX -0.2%) performance building engines for the F-35 fighter have been plagued by “recurring manufacturing quality issues,” Bloomberg reports, citing the Defense Department’s annual report on the program.
- The DoD says quality deficiencies in turbine blades and electronic control systems forced "suspect hardware" to be removed from the operational fleet, but UTX unit Pratt & Whitney “has taken action to improve quality surveillance within their manufacturing processes," and the DoD has worked to ensure improvements are in place as production accelerates.
- UTX is under pressure to hone its quality processes as the Pentagon plans to spend nearly $49B buying as many as 2,457 engines for the fighters built by Lockheed Martin (LMT -0.5%).
- Now read United Technologies: No longer a bargain
Thu, Mar. 17, 10:47 AM
- Lufthansa (OTCQX:DLAKY -4.7%) says issues with the new engine of its A320neo plane are not fully fixed and as a result it is not ready to put more of the revamped jets into commercial service.
- Airbus (OTCPK:EADSY -2.3%) missed an end-2015 target for the first delivery of its new best-selling plane after the engines, made by Pratt & Whitney (UTX +0.6%), needed longer than usual to start properly.
- Lufthansa, which stepped in as the first operator when Qatar Airways refused to take the plane, took delivery of its first A320neo in January. The carrier is due to receive five more A320neo jets in 2016.
- Previously: New snag for Pratt & Whitney engines (Feb. 26 2016)
Thu, Mar. 10, 6:25 PM
- Even though it gave a stiff-arm to a huge acquisition proposal from Honeywell (HON -0.5%), United Technologies (UTX -0.4%) says it would listen to another big merger offer.
- UTX had rebuffed a reported megadeal from Honeywell, saying the regulatory issues in combining two companies each worth more than $70B (and supplying so much of each plane) would make it a nonstarter.
- "I wouldn't be afraid to do a big deal," CEO Gregory Hayes said at an investor meeting today. But "it's got to be something that's actionable ... and the regulatory hurdles have to be manageable."
- Without a deal, UTX is poised for "huge growth," he says, but there may be appetite in its commercial business (elevators, fire, security systems) and perhaps its aerospace systems business for a large deal.
- Investing in aerospace systems and Pratt & Whitney has set up those divisions for "nearly a trillion" dollars in sales over the next 25 years, Hayes said.
- Previously: Honeywell: Regulation not an obstacle to United Tech merger (Feb. 23 2016)
- Previously: Honeywell closes lower on report that UTX rebuffed merger as unlikely (Feb. 22 2016)
- Previously: CNBC: Honeywell, United Technologies discussed megamerger (Feb. 22 2016)
Thu, Mar. 10, 7:58 AM
- Q1 Adjusted EPS of $1.35-$1.40.
- 2016 Adjusted EPS of $6.30-$6.60.
- Organic sales growth at a 5%-8% CAGR through 2020.
- Source: Press Release
Wed, Mar. 9, 2:27 PM
- Airbus (OTCPK:EADSF, OTCPK:EADSY) for the first time flew its A321neo single-aisle plane powered by Pratt & Whitney (NYSE:UTX) engines.
- Airbus says the first A321neo to go to an airline customer will still feature Pratt engines, with delivery planned toward year's end.
- The new Airbus single-aisle jets are offered with a choice of engines, while the rival Boeing (NYSE:BA) 737 Max, which flew for the first time in January, comes only with engines from GE-Safran joint venture CFM International.
Mon, Mar. 7, 5:17 PM
- The U.S. Air Force selects the Pratt & Whitney unit of United Technologies (NYSE:UTX) to build the engines for the Northrop Grumman's (NYSE:NOC) new $80B long-range strike bomber, while six other contractors are chosen to work on unspecified "airframe or mission systems."
- Analysts had expected Pratt & Whitney's selection as the engine supplier since the company already builds engines for the Lockheed-built F-35 combat jet.
- The other key suppliers are BAE Systems (OTCPK:BAESF, OTCPK:BAESY) and GKN (OTC:GKNCF), both based in the U.K., as well as Spirit AeroSystems (NYSE:SPR), Orbital ATK (NYSE:OA), Rockwell Collins (NYSE:COL) and Janicki Industries.
- NOC recently resumed work on developing the plane after Boeing and Lockheed dropped a protest when they lost the main contract.
Thu, Mar. 3, 2:00 AM
- After dropping a merger bid for United Technologies (NYSE:UTX) earlier this week, Honeywell (NYSE:HON) CEO David Cote said his firm will walk away on friendly terms, without going hostile.
- "I was pretty clear from the beginning with investors that I'm not going to do that," he proclaimed during an interview with Jim Cramer. "We've got plenty of other opportunities."
- Cote also noted that, had the deal been successful, he would have considered serving as CEO of the combined company.
Tue, Mar. 1, 11:23 AM
- "This is the appropriate outcome given the strong regulatory obstacles, negative customer reaction and the potential for a protracted review process that would have destroyed shareholder value," the company said in a statement.
- "UTC will remain laser focused on our key priorities - program execution, innovation, cost reduction and disciplined capital allocation. Our outlook remains strong and our industry-leading franchises are well positioned to deliver strong earnings growth and create shareholder value well into the future."
- Previously: Honeywell drops bid for UTX (Mar. 01 2016)
Tue, Mar. 1, 9:13 AM| Tue, Mar. 1, 9:13 AM | 12 Comments
Tue, Mar. 1, 8:34 AM
- RBC upgrades the stock to Outperform from Sector Perform, stating United Tech (NYSE:UTX) is now "in play" despite its rejection of Honeywell's buyout overture.
- UTX +1.4% premarket
Mon, Feb. 29, 10:47 AM
- Wells Fargo's Sam Pearlstein contends that United Technologies (UTX -0.9%) has six options when considering Honeywell's (HON) bid for the industrial company:
- 1) It can just say no to a merger; 2) Hold out for a higher price; 3) Effect a different transaction such as a swap of businesses; 4) Find another merger partner; 5) Look to create value near-term through a leveraged recap or split of the company; 6) Do something rash and make a sizeable acquisition of companies that would prevent a Honeywell merger.
- Given that United Technologies management is focused on driving shareholder value, Pearlstein doesn't expect a move such as the latter and the likelihood of another spin-off/split of the company also seems unlikely. As a result, most of the items would not be value adding strategies.
Fri, Feb. 26, 3:12 PM
- According to a regulatory filing, Honeywell (HON -0.7%) CEO David Cote sold about 345K shares worth roughly $36M in company stock on Feb. 16 - three days prior to his company approaching United Technologies (UTX -0.9%) with a buyout offer.
- The filing doesn't indicate whether the sale was part of a pre-arranged plan.
- Honeywell's stock price sunk about 7% following the leak of its offer a few days later.
- Cote has been a fairly active seller of company stock over the past year, unloading nearly 900K shares.
- Previously: Honeywell says it offered to buy United Technologies for $108/share (Feb. 26)
Fri, Feb. 26, 2:11 PM
- United Technologies (UTX -1.2%) issues a letter and presentation responding to Honeywell's (HON -0.1%) earlier presentation, saying HON's takeover proposal "grossly undervalues" the company.
- Even if a deal materializes, UTX says regulatory delays "would ultimately destroy shareholder value."
- HON said earlier that it had offered to buy UTX for $108/share, valuing the company at ~$90.7B.
- UTX resumes trading after a brief halt, turning lower.
Fri, Feb. 26, 9:49 AM
- Honeywell (HON -0.2%) releases details of its rebuffed offer for United Technologies (UTX +0.7%), saying it was seeking to re-engage on a possible transaction.
- HON said in a presentation to UTX Chairman Edward Kangas and CEO Gregory Hayes that its proposed offer of $108/share would lead to cost savings of $3.5B in four years.
- Hayes said earlier this week that antitrust hurdles and customer resistance would make a merger too difficult to fulfill.
United Technologies Corp. provides products and services to the building systems and aerospace industries worldwide. The company operates through five business segments: Otis, UTC Climate, Controls & Security, Pratt & Whitney, UTC Aerospace Systems, and Sikorsky. The Otis segment designs,... More
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