As the Paris air show kicks off, industry participants are once again getting used to the idea of two familiar company names being merged into a single entity.
Even for an industry now familiar with consolidations, the proposed merger announcement by AlliedSignal and Honeywell, announced on the eve of the show, has taken people by surprise.
But senior management at both companies are reporting an overwhelmingly positive reaction to the $14 billion merger.
The unusual aspect of this particular merger - the fact that the merged entity smaller company's name - is also being regarded as a sharp move.
The Honeywell name, industry experts point out, is the stronger brand and so AlliedSignal chiefs have made an important strategic decision to relinquish their own company's identity.
In an exclusive interview with the Flight Daily News, Mike Smith, Honeywell's president of commercial aviation systems, and acting president of the space and control group, sums up the key advantages of the deal.
"Because our product lines and businesses are very complementary and there are not very many areas where we have competed nose to nose, then we think that they fit together very nicely," says Smith.
"Also, with both aerospace businesses already located in Arizona, we think it should be a relatively easy merger to put in place."
Approval
The merger, which requires US government approval, will create a company with $25 billion in revenues, of which the largest single segment - over $10billion - will be the combined aerospace segments.
Lawrence Bossidy, AlliedSignal's chairman and chief executive officer, will become the new company's chairman and oversee the merger process until he retires in April next year. At that point, Honeywell's chairman Mike Bonsignore will become CEO.
"AlliedSignal is a company that has been created over time by putting together many companies," says Smith.
Visible
"It was felt that the Honeywell name was more visible because we have the integrated systems focus, while they tend more towards the products focus. Also, we have a very deep relationship with the OEMs."
The combined aerospace business will be located in AlliedSignal's current headquarters in Phoenix, Arizona.
Smith says that the opportunities for reducing costs, as well as combining research and development resources, is a key reason why the merger is also being welcomed by customer of both potential partners.
"Cost is the name of the game nowadays and we need to take full advantage of the opportunities that this merger offers," says Smith.
Source: Flight Daily News
