Honeywell offer for United Tech worth more than $90 billion

Shareholders of United Technologies would receive $42.63 for each share they own, plus 0.614 of Honeywell stock.

A powerpoint presentation released on 26 February by Honeywell argues that the deal offers major benefits for the large aircraft manufacturers, despite the publicly stated opposition to a Honeywell-UTC merger by Airbus and Embraer chief executives earlier this week.

The Morris Plains, N.J., company said a combination of the two businesses would cut costs by 3.5 percent of sales by the fourth year by consolidating properties, improve leverage in purchases and reduce administrative expenses.

Greg Hayes, chief executive officer of United Technologies, said in a CNBC interview Tuesday that the conglomerate rejected the merger, citing difficulties winning approval from regulators.

United Tech pulled out of the talks due to antitrust worries.

“There’s just no way to get it done”.

Honeywell, however, said potential regulatory issues would be “easily resolved”. (NYSE:HON) for a possible merger to enhance shareholders’ value.

“Putting aside the insurmountable regulatory risks, the proposal is not an attractive deal for UTC’s shareholders and does not reflect UTC’s strong long term outlook”, he said.

This week, Honeywell CEO David Cote has been on the road, including visiting with investors in Boston to make his case on the merits of the deal.

The companies together would have operating margins of about 20 percent and annual cash flow of about $10 billion, which would allow for “rapid deleveraging” and flexibility for investment, the Honeywell presentation said. That would allow those customers to negotiate lower prices, or even find new suppliers, the source said.

The combined company would generate about 28 per cent of sales from commercial aerospace customers, and 13 per cent from the defense and space sector, according to Honeywell’s presentation.