Graham Warwick/WASHINGTON DC
The aerospace industry is once again in the grip of merger fever, with General Electric (GE) trumping United Technologies' (UTC) bid for Honeywell, Rockwell Collins announcing the takeover of military cockpit displays specialist Kaiser Aerospace & Electronics, and the jilted UTC apparently looking for another merger target.
GE's successful bid was conceived and accepted within three days of news of the Honeywell/ UTC talks becoming public, with the industrial leviathan's chief executive Jack Welch contacting his Honeywell counterpart Michael Bonsignore with a $45 billion offer - $5 billion more than bid by UTC.
The merger involves almost no product overlap: the UTC proposal may have required substantial divestitures to win US and European regulatory approval, due to an overlap in aircraft engines and systems between Honeywell and UTC's HamiltonSundstrand and Pratt &Whitney Canada divisions.
The timing of Rockwell's $300 million Kaiser deal has led to speculation that the move is meant to strengthen the avionics specialist's hand against a merged GE/ Honeywell, although Collins president Clay Jones says the deal has been in the pipeline for some time. Privately held KSystems put Kaiser up for sale earlier this year, he says.
Though in acquisition mode, Rockwell could itself become the target of a takeover bid, with rumours flying after UTC chairman David George made it clear he was still on the prowl for a merger, despite the Honeywell setback. Jones says Collins will, meanwhile, look at Litton's Advanced Electronics group if the company puts up its navigation and electronic warfare businesses for sale.
The Kaiser deal strengthens the company's presence in the military market, and follows Collins' assumption of full ownership of civil head-up display specialist Flight Dynamics (also from Kaiser) and its acquisition of in-flight entertainment specialist Sony Trans Com. "We were not strong in tactical airborne products," Jones says.
Kaiser specialises in head-down, head-up and helmet-mounted displays and is a key supplier on the Boeing F/A-18E/F Super Hornet, Lockheed Martin/Boeing F-22 Raptor and Boeing/Sikorsky RAH-66 Comanche programmes. It is also developing new projection liquid-crystal display technologies, which Collins will apply across its markets, Jones says.
Kaiser has nine businesses, producing components ranging from composite structures to actuators and valves. It had sales of $210 million last year, and will be operated as a stand-alone unit until Collins decides whether to retain all the businesses, says Jones.
Source: Flight International
