UTC, which includes air conditioning manufacturer Carrier, UTC Aerospace and Pratt & Whitney amongst its group companies, admits that it had previously engaged in preliminary, exploratory conversations about a range of potential collaborative options with Honeywell. However, UTC says it never explored these options further “due to significant regulatory obstacles, customer concerns and valuation issues”.
In particular, UTC was concerned that combining two of the world’s largest players in the aerospace and commercial building segments would face insurmountable regulatory obstacles and strong customer opposition, and could either be blocked outright or conditioned on significant divestitures after a lengthy and disruptive review period that would destroy shareholder value.
Reports surfaced on Monday that in recent weeks Honeywell had made a bid in stock and cash for UTC that would have given UTC shareholders 40% of a combined company with $94bn in sales.
It’s not the first time the two companies have held talks. According to the CNBC news channel, talks were previously held last year, when UTC was larger in value than Honeywell. A merger of equals was discussed but with UTC in control. Those talks broke down when the UTC stock price declined.