Analysts Say The Acquistion Is 'Not A Surprise'

We hear a lot about mergerers and acquisitions in the aviation industry, but this is comparable to Goliath gobbling up Goliath. United Technologies said late Wednesday it has struck a deal to acquire Goodrich at a 16% premium to the stock's latest close.

United Technologies said it is paying $127.50 per share in cash to buy Goodrich. The deal totals $18.4 billion, including $1.9 billion in net debt. United Technologies said it expects finance the deal with debt and equity issuance, with the equity component likely 25% of the total. Shares of Goodrich finished Wednesday's session at $109.49 and traded around $122 at 2000 ET before the deal was officially announced.

United Technologies is an industrial systems and aerospace giant with a market cap around $68 billion. The company manufactures everything from elevators and escalators to helicopters and fuel cells. Goodrich is primarily an aerospace company and manufactures aircraft landing systems and electronic systems.

United Technologies expects the transaction will be accretive to earnings in the second year. United Technologies also reaffirmed its expectations for 2011 revenues of approximately $58 billion, earnings per share in the range of $5.35 to $5.45.

Analysts say the deal announcement is not a surprise, after the Financial Times reported earlier this week that United Technologies would spend about $15 billion to buy Goodrich.

"Goodrich delivers on all of our acquisition criteria. It is strategic to our core, has great technology and people, and strengthens our position in growth markets,” said United Technologies Chairman and Chief Executive Officer Louis Chênevert. “We are very excited to bring the capabilities of two great companies together, making us more competitive and better able to provide value to both customers and shareholders.”

“We are extremely pleased to have an agreement with United Technologies that delivers immediate cash value to our shareholders at a premium that reflects the strength of our business,” said Marshall Larsen, Chairman, President and Chief Executive Officer of Goodrich. “Our combination with United Technologies is a testament to our employees and will enable us to shape the future of aerospace through continued innovation, increased global scale and the best talent in the industry. Importantly, United Technologies has a similar culture of mutual trust and respect, accountability and teamwork. Goodrich’s long and proud history will enter a new chapter as part of United Technologies.”

FMI: www.utc.com