Bloomberg News

United Technologies Said to Move Closer to Deal for Goodrich

September 21, 2011

(Updates share prices starting in fourth paragraph.)

Sept. 21 (Bloomberg) -- United Technologies Corp. is moving closer to an agreement to buy Goodrich Corp. in an all-cash deal and may announce a takeover as soon as today, according to two people with knowledge of the discussions.

The companies were negotiating a price of $110 to $120 a share at the end of last week, said one of the people, who declined to be identified because the matter is private. The gap had narrowed to $5 a share as of Sept. 18, the person said.

Buying Goodrich would add the world’s largest maker of aircraft landing gear to an aerospace portfolio at Hartford, Connecticut-based United Technologies that includes Sikorsky helicopters, Pratt & Whitney jet engines and the Hamilton Sundstrand unit, whose products include aviation electronics.

Goodrich closed at $86.48 on Sept. 15 in New York Stock Exchange composite trading. The shares have surged since Bloomberg News reported Sept. 16 that United Technologies was in talks to acquire the Charlotte, North Carolina-based company. They fell $2.33, or 2.1 percent, to $109.49 at 4:15 p.m. today.

United Technologies may announce a takeover after the close of U.S. markets today, or tomorrow, the people said.

John Moran, a spokesman for United Technologies, declined to comment. Spokesmen for Goodrich didn’t return calls or e- mails seeking comment.

Analyst’s View

“If United Technologies were able to acquire Goodrich for $125 a share, that would be a good price for both sides,” Robert Stallard, an RBC Capital Markets analyst in New York, said yesterday in a note to investors. He recommends buying United Technologies and Goodrich.

Goodrich’s market value was $13.7 billion as of the close of trading today, according to data compiled by Bloomberg, while United Technologies’ was $68 billion. United Technologies fell 1.5 percent today to $74.87, below its closing price of $75.61 on Sept. 15.

Adding commercial aerospace revenue would be a boost for United Technologies after Pratt’s geared turbofan engine failed to win placement on Boeing Co.’s upgraded 737. Chief Executive Officer Louis Chenevert spent more than $1 billion and a decade developing the engine, an option on the Airbus SAS A320neo that competes with the 737.

United Technologies had $5.4 billion in cash and near- cash items at the end of last quarter, and posted sales of $54.3 billion in 2010. Goodrich reported revenue of $6.97 billion last year.

Besides landing gear, Goodrich’s aerospace products include nacelles, the casings that hold jet engines; electronics; and temperature-control systems.

--With assistance from Rachel Layne in Boston and Susanna Ray in Seattle. Editors: Ed Dufner, Elizabeth Wollman

To contact the reporters on this story: Jeffrey McCracken in New York at jmccracken3@bloomberg.net; Zachary Mider in New York at zmider1@bloomberg.net

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net


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