Exclusive: United Tech weighs $1 billion Pratt asset sale: sources

Mon Jun 18, 2012 4:23pm EDT
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By Soyoung Kim and Andrea Shalal-Esa

NEW YORK/WASHINGTON (Reuters) - United Technologies Corp is looking to sell power generation assets within its Pratt and Whitney subsidiary in a deal that could fetch around $1 billion, according to three people familiar with the matter.

The business, called Pratt & Whitney Power Systems, manufactures industrial gas turbines and geothermal power systems based on Pratt & Whitney's aircraft engine technology, and helps generate electricity for businesses and cities.

Deutsche Bank is advising United Technologies on the potential divestiture, one of the people said.

The three sources spoke on Monday. All of them asked not to be named because they were not authorized to speak publicly about the matter. A United Technologies spokesman declined to comment and Deutsche Bank also declined to comment.

The potential sale is part of the diversified industrial conglomerate's effort to focus more on the aerospace and propulsion segments and move away from businesses that are not seen as core, according to the people familiar with the matter.

"While this is a good and profitable business, it's not part of the core aerospace and propulsion business," said a second source, adding that some potential buyers were already showing interest in the business, although it was still early in the process.

A third source said the Pratt & Whitney power systems business needed some investment to get to the next phase of its growth plan, but United Tech preferred to put its capital more directly into the aerospace propulsion sector.

The sale would likely occur after United Technologies closes its planned $16.5 billion purchase of aircraft components maker Goodrich Corp, that person added.   Continued...

An FT8 Gas Turbine from Pratt & Whitney Power Systems is pictured in this undated handout photo from Pratt & Whitney, received by Reuters on June 18, 2012. REUTERS/Pratt & Whitney/Handout