United Technologies Corp. (NYSE:UTX) is nearing a deal to buy Rockwell Collins Inc. (NYSE:COL) for more than $20 billion, a tie-up that would create one of the world's biggest aircraft-equipment makers.
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The companies are discussing a per-share price for Rockwell of $140 or less and could come to an agreement as soon as this weekend, according to people familiar with the situation. Rockwell shares closed at $127.99 Monday, giving the company a market value of $20.8 billion.
As with all acquisition talks, it is possible they could hit a snag and not result in a deal, or the expected price could change.
The deal would boost United Technologies' business supplying Boeing Co. and Airbus SE as the aerospace industry ramps up for a new generation of jets. The company already owns one of the world's biggest jet-engine makers, Pratt & Whitney, part of an aerospace division that also makes parts such as wheels and landing gear.
Rockwell specializes in cockpit displays and communications systems for passenger jets and military programs. In April, the Cedar Rapids, Iowa, company closed its roughly $6 billion acquisition of B/E Aerospace Inc., a maker of plane seats and interiors.
Since word of the talks surfaced this month, several analysts have said they don't expect significant antitrust issues given United Technologies and Rockwell make different airplane parts. But airplane manufacturers might voice concerns about any consolidation among their suppliers. Boeing and Airbus have also been nudging their way into aftermarket business to capture some of the profit from selling and servicing parts -- putting them on a collision course with suppliers.
The possibility of a United Technologies deal for Rockwell caught some analysts by surprise. In June, United Technologies Chief Executive Greg Hayes told analysts the Farmington, Conn., company was looking to spend roughly $1 billion on acquisitions this year. It had about $7 billion in cash.
"As far as bigger M&A, it's something we always look at, but I am reluctant to go out and pay some of the prices that we see today," Mr. Hayes said at the Paris Air Show.
United Technologies has a market value of about $92 billion. Last year, the industrial giant, which also makes Carrier climate control systems and Otis elevators, rebuffed unsolicited takeover approaches from Honeywell International Inc.
Thomas Gryta contributed to this article.
By Dana Mattioli, Joann S. Lublin and David Benoit