Rockwell Collins turns to JPMorgan, Citi for advice, sources say - MergerMarket
08 AUG 2017
Rockwell Collins [NYSE:COL] is working with JPMorgan and Citigroup to review an approach from United Technologies [NYSE:UTX], said two sources briefed on the matter.
The two aerospace giants are reportedly in discussions about a merger after Farmington, Connecticut-based United Technologies approached Rockwell Collins. United Technologies made an initial offer of less than USD 140 per share for the company, according to TheWall Street Journal .
Last week, Bloomberg was first to report that United Technologies was considering an acquisition of Cedar Rapids, Iowa-based Rockwell Collins months after the company completed the transformational acquisition of B/E Aerospace.
Rockwell Collins, a manufacturer of flight deck avionics, cabin electronics and communication systems, came under fire for proposing to pay USD 8.2bn to buy B/E Aerospace, a developer of aircraft interiors, last year.
The acquisition drew scrutiny from investors and deal makers over timing, valuation and strategic merit. Activist investor Starboard Value unsuccessfully tried to convince Rockwell Collins not to proceed with the deal. The fund no longer holds Rockwell shares, according to its most recent 13-F filing.
Given the differences between Rockwell Collins and B/E Aerospace’s businesses, there was speculation that an interloper would surface to acquire Rockwell Collins, which has long been considered a target.
At the time, a sector advisor said he was “yet to find anybody that thinks [the B/E Aerospace deal was] not a defensive play on the part of Rockwell to make them less likely to be taken over.” The same advisor said General Electric[NYSE:GE] and United Technologies were the two best buyers for Rockwell Collins.
In early 2016, United Technologies itself could have attempted to use a Rockwell Collins acquisition as a defensive play to avoid a takeover, a sector advisor said. At that time, Honeywell International [NYSE:HON] had offered to acquire United Technologies for USD 108 per share. The bid ultimately failed.
Commenting on the logic of United Technologies moving now for Rockwell Collins, one of the sources said the deal would give the company a more comprehensive portfolio with a larger presence in airplanes to better supply aircraft manufacturer Boeing [NYSE:BA].
Third Point is currently pushing Honeywell to divest its aerospace division. Goldman Sachs and Centerview Partnersare advising that company on a review of the business in response to the activist, this news service has reported.
GE, meanwhile, is looking to divest numerous business lines as the conglomerate looks to reshape its portfolio of industrial and financial assets.
JPMorgan and Skadden Arps advised Rockwell Collins on the B/E Aerospace deal. Citigroup, Goldman Sachs Shearman and Sterling worked with B/E Aerospace. United Technologies has worked with JPMorgan, Cleary Gottlieb and Wachtell Lipton on past deals.
Rockwell Collins, United Technologies, JPMorgan and Citigroup declined comment.