Honeywell Ends Attempts At United Tech Merger (NYSE:HON)

Honeywell International Inc has ended its bid to acquire rival aircraft parts maker United Technologies Corp. in a proposed $90.7 billion deal. A combination of the two would have created a company with nearly $100 billion in revenue. The company cited United Technologies’ unwillingness to engage in negotiations as the reason for ending the merger attempt.

United Tech rejected Honeywell’s offer last week, saying that regulatory delays, required divestitures and customer concerns would outweigh any synergies from combining the companies. Major customers Airbus Group and Boeing Co also weighed in, saying they did not support a merger between the companies. The two companies are responsible for a huge amount of equipment on commercial airliners, including jet engines, cockpit displays, and landing gear.

Honeywell said it strongly disagreed with United Tech’s assessment of the merger’s chances of success. It also said that United Tech was mischaracterizing the regulatory and customer risks associated with the deal. Honeywell released a statement on Tuesday saying, “We remain confident that the regulatory process would not have presented a material obstacle to a transaction.”

Now investors are trying to judge United Tech’s ability to operate as a stand-alone industrial conglomerate in the face of headwinds from multiple sides of its business. Some are saying that United Tech could boost its stock by splitting its industrial and aerospace arms or pursuing its own acquisitions. However, on Friday, Reuters reported that United Tech CEO Greg Hayes does not intend to break up the company.

United Tech says that it will now turn its attention to refreshing its product line and focusing on the engineering and development of other initiatives. The company said in a statement on Tuesday, “UTC will remain laser focused on our key priorities – program execution, innovation, cost reduction and disciplined capital allocation.” Shares of United Tech were down 2.8 percent in early trading on Tuesday, while Honeywell was up 3.2 percent.

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