United Technologies (UTC) is reportedly approaching a deal to acquire aircraft equipment manufacturer Rockwell Collins for between $20 billion and $30 billion, with UTC said to be ready to pay about $140 per share. That would represent around a 9% premium to the closing share price of Rockwell (NYSE: COL) on Monday.
Even if the price tag is closer to $20 billion, a takeover of Rockwell by UTC would be the largest corporate acquisition in the defense & aerospace industry since at least 2005, according to the PitchBook Platform—breaking UTC's own record in the process. Currently, the biggest M&A deal of the past dozen years in the sector was UTC's purchase of Goodrich in 2012, a move that had an enterprise value of $18.4 billion.
The sale of Rockwell to UTC would tie together several major players in the aerospace industry. UTC is a manufacturer of aircraft engines, aerospace systems and various other tech-focused products; the company owns Pratt & Whitney, a major aerospace business with $14 billion in revenue as of 2015. Rockwell, meanwhile, is a maker of equipment for commercial and military airplanes including cockpit displays and communications systems. The company completed a significant acquisition of its own earlier this year, buying fellow aircraft equipment maker B/E Aerospace for $8.6 billion.
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At the moment, that deal is the second-largest M&A move in the space since the start of 2005, trailing only UTC's acquisition of Goodrich.
With the exception of a post-crisis dip, strategic deal flow in the aerospace & defense sector has remained mostly steady in the past dozen years in the US and Europe, per PitchBook data, usually hovering between 80 and 95 transactions a year. So far in 2017, however, corporate acquirers have completed just 37 moves in the space, on pace for the lowest annual total since 2006.
Helping make up for that scarcity, though, are a number of big-money deals. The approximately $11.3 billion spent on corporate aerospace M&A in the US and Europe so far in 2017 is already the third-highest total of the past 12 years, trailing only 2012 and 2007. Here's a full look at the data:
PitchBook subscribers can learn everything there is to know about M&A activity in aerospace.
Article by Kevin Dowd, PitchBook