Feb 23 (Reuters) - Aerospace component supplier Honeywell International Inc confirmed on Tuesday that it had engaged in deal talks with United Technologies Corp over the past year, and said it did not see regulatory process as a “material obstacle” to the deal.
The announcement comes a day after United Tech disclosed merger talks with Honeywell and said a deal would “face insurmountable regulatory obstacles”.
United Tech, which makes Pratt & Whitney jet engines and Otis elevators, said on Monday that a merger could either be blocked outright or conditioned on significant divestitures after a lengthy and disruptive review period that would destroy shareholder value.
“A combined Honeywell and United Technologies would maintain a strong investment grade rating, and have higher free cash flow,” Honeywell said.
A merger of the two firms would create a behemoth with combined sales of more than $90 billion, a company responsible for a huge amount of equipment on commercial airliners, ranging from jet engines to airplane cockpits and landing gear.
United Tech and Honeywell first began exploring a merger as early as 1993, but the talks were revived after a broad strategic review initiated by United Tech Chief Executive Greg Hayes when he took over last year, Reuters reported on Monday, citing sources. That review also resulted in United Technologies selling Sikorsky Aircraft to Lockheed Martin Corp. (Reporting by Arunima Banerjee in Bengaluru; Editing by Maju Samuel)