This split will make pure-play leaders

Article Excerpt

United Technologies recently completed its acquisition of Rockwell Collins—a rival maker of aircraft parts. Like most big acquisitions, this one adds risk, but it also comes with several long-term benefits. Those include giving United Technologies more clout when negotiating new deals with big aircraft makers such as Boeing and Airbus. The company now plans to spin off its Otis (elevators) and Carrier (heating and air conditioning) operations as two separate companies. The remaining firm will focus on Pratt & Whitney jet engines and other aerospace products. Creating three pure-play firms should eliminate United Technologies’ holding company discount and so unlock significant value. UNITED TECHNOLOGIES CORP. $114 (New York symbol UTX; Manufacturing & Industry sector; Shares outstanding: 863.4 million; Market cap: $98.4 billion; Takeover Target Rating: Lowest; Dividend yield: 2.6%; began operating in 1929 as The United Aircraft and Transport Corp. That holding company built airplanes and operated regional airlines. United Technologies gets 50% of its revenue from Industrial clients, followed by Commercial Aerospace (37%) and…

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