Bloomberg News

United Technologies Sees 50% Cut in Goodrich-Funding Equity

February 24, 2012

(Updates with closing stock price in last paragraph.)

Feb. 23 (Bloomberg) -- United Technologies Corp. may shrink the amount of equity issued to help finance the acquisition of Goodrich Corp. about 50 percent by relying more on asset sales and repatriation of overseas cash.

“There is a clear path at this point in time to have equity being probably $2 billion or less,” Chief Executive Officer Louis Chenevert said today at a Barclays Plc conference in Miami. The maker of Pratt & Whitney jet engines initially planned to pay for about 25 percent of the $16.5 billion purchase with stock.

While Chenevert didn’t detail which assets the company might sell to limit the stock issuance, he said he wouldn’t dispose of any “critical” business. United Technologies is weighing the sale of a pump- and compressor-making division and its Rocketdyne unit, people with knowledge of the matter said this month.

The equity offering is part of Chenevert’s strategy to complete the purchase of Goodrich, the biggest maker of aircraft landing gear, while protecting United Technologies’ credit rating.

“The credit rating at UTC is important,” especially in the event of an economic slump, he said. “Not that we see any drama in front, but at a company with the size and scale of United Technologies, it’s certainly my responsibility to be prudent and expect that there could be challenges.”

The Goodrich deal will reduce earnings per share this year by 40 cents, a 10-cent improvement from an earlier forecast, Chenevert said today.

Profit in 2012 will be $5.40 to $5.60 a share including those costs, the Hartford, Connecticut-based company said in a presentation posted on its website. The company had forecast $5.30 to $5.50 a share in December.

United Technologies fell 0.6 percent to $83.49 at the close in New York. The shares have climbed 14 percent this year.

--Editors: James Langford, John Lear

To contact the reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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