Ramon Lopez/WASHINGTON DC
United Technologies (UTC) has agreed to buy fellow US manufacturer Sundstrand for $4.3 billion in a move that reinforces UTC's commitment to the aerospace sector as a core business.
Sundstrand will merge with UTC's Hamilton Standard subsidiary to form one of the world's leading suppliers of airframe components and subsystems, bolstering UTC's position in the rapidly consolidating aerospace and industrial components industries. The new unit will be named Hamilton Sundstrand.
UTC is the USA's fourth-largest aerospace manufacturer. Last year, the company generated sales of $10.76 billion from aerospace interests (which include Pratt & Whitney aero engines and helicopter manufacturer Sikorsky), while $1.23 billion of Sundstrand's $2 billion turnover came from its aerospace divisions.
Although the deal involves two industry giants, it does not bear the hallmark of some of the size-inspired mergers of recent years and, according to Sundstrand chairman and chief executive Robert Jenkins, it makes good sense "in the context of accelerating industry consolidation", with the two companies forming "an excellent strategic fit".
While UTC's roots are in aerospace, the Sundstrand deal - which still faces anti-trust review - is the company's first major aerospace acquisition since its own chairman and chief executive, George David, said four years ago that "-it might be nice to make an acquisition, or two or three", in the sector.
The Sundstrand deal was disclosed amid speculation that Sikorsky is ready to acquire Boeing's military helicopter business. Although only rumour, such a move would signal the start of a long-awaited consolidation of the US helicopter industry. While Boeing acquired the McDonnell Douglas helicopter business as part of its wider acquisition of the company, it has since sold the civil helicopter activities to RDM of the Netherlands.
Two other top US Department of Defense contractors are considering a merger, with General Dynamics making a bid for Newport News Shipbuilding - a move which, given Newport's bid for Avondale Industries, could reduce the US Navy's pool of primary warship contractors to just two.
Source: Flight International
