Military

Honeywell Made United Technologies an Offer It Could Easily Refuse

Paul Ausick

Published: February 26, 2016 12:45 pm

Last Updated: January 13, 2020 12:39 pm

Calling the combination “compelling,” Honeywell International Inc. (NYSE: HON) Chairman and CEO Dave Cote tried last week to convince United Technologies Corp. (NYSE: UTX) Chairman Edward A. Kangas and UTC CEO Gregory J. Hayes that a $90.7 billion merger between the two industrial giants was a “unique opportunity” to grow revenues and earnings at a time when the financing market is “highly favorable.” UTC was not convinced.

On Friday morning, Honeywell released a copy of the presentation that Cote gave to Kangas and Hayes on February 19 and that UTC declined on February 22 saying that such a merger “would face insurmountable regulatory obstacles and strong customer opposition.”

One customer, Airbus, proved that point when CEO Tom Enders said that he did not see such a combination as being in the best interests of Airbus. Honeywell and UTC are among the airframe maker’s 20 largest suppliers. Boeing Co. (NYSE: BA) said it would want to take a “very close look at the potential impact” of such a merger on itself and its customers.

And because Honeywell and UTC are both suppliers to the U.S. Department of Defense, the Pentagon would want to weigh in. Late last year federal government agencies, including the Pentagon, were said to be drafting a proposal to allow regulators to block proposed mergers on national security grounds as well as for antitrust concerns.

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