United Tech keeps to solo path as Honeywell drops bid

Tue Mar 1, 2016 12:49pm EST
 
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By Michael Flaherty and Ankit Ajmera

(Reuters) - Aircraft parts maker Honeywell International Inc (HON.N: Quote) said Tuesday it scrapped its $90.7 billion offer to buy rival United Technologies Corp (UTX.N: Quote), citing the company's unwillingness to engage in negotiations.

The move comes after United Tech rejected Honeywell's offer last week, saying any synergies from combining the companies would be outweighed by regulatory delays, required divestitures and customer concerns.

With another round of Honeywell merger talks behind it, the focus now turns to United Tech's ability to operate as a stand-alone industrial conglomerate that faces headwinds from multiple sides of its business.

"Now the pressure is on for UTC to create shareholder value," said Jeff Bialos, a law partner with Sutherland Asbill & Brennan and a former senior Pentagon official.

Honeywell said it strongly disagreed with United Tech's characterization of the regulatory and customer risks associated with a deal.

"We remain confident that the regulatory process would not have presented a material obstacle to a transaction," Honeywell said in a statement on Tuesday.

Analysts and industry executives said paths that United Tech can pursue to boost its stock include splitting its industrial and aerospace arms or pursuing its own acquisitions.

Reuters had reported Friday that United Tech CEO Greg Hayes does not intend to break up the company, but will instead focus on initiatives such as investment in its Pratt & Whitney turbofan engines. Its underperforming Otis elevator division is facing steep engineering and development costs as the company tries to refresh its product line.   Continued...

 
A view of the corporate sign outside the Honeywell International Automation and Control Solutions manufacturing plant in Golden Valley, Minnesota, in this file photo dated January 28, 2010. REUTERS/ Eric Miller