United Technologies to Raise $3 Billion in Sell-Off

March 16, 2012
Portfolio reevaluation will emphasize aerospace assets and help to finance Goodrich acquisition

United Technologies Corp. is proposing to sell of a series of manufacturing companies in a strategy to raise capital to complete its ongoing takeover effort for Goodrich Corp. Goodrich is an aerospace systems suppliers, producing a wide variety of actuation systems, landing gears, engine controls and electronic, and interior and exterior aircraft structures. In September 2011, United Technologies proposed a Goodrich acquisition for $18.4 billion ($16.5 billion in cash, $1.9 billion in Goodrich debt.)

UTC is a holding company for numerous manufacturing companies supplying components and systems for building and aerospace industries. Chairman and CEO Louis Chenevert said the Goodrich acquisition is on track to be completed this summer.

The plan to sell the subsidiaries would raise $3 billion, UTC explained in a release. UTC plans to combine Goodrich with its Hamilton Sundstrand subsidiary as a new business unit. The reorganization that will result will make United Technologies a more concentrated aerospace system manufacturer.

"We are taking the opportunity to re-evaluate our portfolio as we enter a transformational stage with the proposed acquisitions of Goodrich and Rolls-Royce's share in the International Aero Engines joint venture," Chenevert explained. "The proceeds from divestitures of non-core businesses will help minimize the equity issuance and reduce dilution from the Goodrich transaction.

The five business to be sold by United Technologies are five: Pratt & Whitney Rocketdyne, which builds rocket power and propulsion systems; Clipper Windpower, a wind turbine manufacturer; Hamilton Sundstrand Milton Roy, which produces pneumatic, hydraulic-actuated, solenoid-driven, metering, and centrifugal pumps and accessories; Hamiton Sundstrand Sullair, a specialist in rotary-screw air compressor systems; and Hamilton Sundstrand Sundynd, which designs and manufactures pumps and compressors for the process fluid and gas industries.

UTC said these businesses have been classified as discontinued business for its financial reporting, and are being held for sale.

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