United Tech to buy Goodrich for $16.5 billion

United Tech to buy Goodrich for $16.5 billion

United Tech said it would pay $127.50 a share for Goodrich, a 47 per cent premium over the stock’s closing price last Thursday. It also includes $1.9 billion in assumed debt.

Goodrich is poised to grow as key commercial plane programmes such as Boeing 787 Dreamliner and upcoming Airbus A320neo ramp up production. Goodrich supplies parts for Hartford, Connecticut-based United Tech’s Pratt & Whitney jet engines and Hamilton Sundstrand’s aircraft electronics. The deal is United Tech’s largest since its year 2000 showdown with General Electric Co over Honeywell International Inc. United Tech made a $36 billion offer for Honeywell, which GE topped. European regulators ultimately scuttled that deal.

Goodrich CEO Marshall Larsen, a 34-year Goodrich veteran, will run the new UTC Aerospace Systems unit, which will be based in Goodrich’s current home town of Charlotte, North Carolina.

United Tech plans to sell $4.2 billion in stock and suspend share repurchases through next year to maintain its credit rating, according to the Wall Street Journal, which said JPMorgan Chase is leading a $15 billion loan package for the deal, with HSBC Holdings and Bank of America Corp also involved in the financing.

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