Late on Monday, United Technologies announced their plan to split into three companies. These companies will be Otis, Carrier, and United Technologies (of course). In addition, the company has reported completion of its acquisition of Rockwell Collins, combining that business with the UTC Aerospace Systems arm. The combined company is now called Collins Aerospace Systems, which will be housed in the United Technologies company post-split.
In terms of the other two companies, Otis is an elevator manufacturer and Carrier manufactures/distributes a variety of products, particularly those within the HVAC and refrigeration industries.
Rockwell Collins Inc is an aerospace manufacturer and UTC recently paid $30 billion to acquire it, as well as the jet engine manufacturer Pratt & Whitney. Combined, the two companies posted $39 billion in revenue in 2017.
Chairman and CEO Gregory Hayes commented that splitting the company into three standalone businesses will mean they are better prepared to confront specific obstacles and also provide more rewarding career opportunities for workers. And, according to United Technologies, Hayes will be in charge of overseeing the split and will also retain his role as chairman and CEO of United Technologies.
Of course, this plan could not be feasible unless shareholders sign off. Fortunately, UTC has a plan for this: it will spin off the marquee Otis elevator brand to shareholders, a brand which posted $12.3 billion in revenue in 2017. Shareholders will also spin off into UTC’s Climate, Controls, & Security business—which, again, mostly manufactures heating and air conditioning equipment, as well as building security systems—which posted $18 billion in the same year.
UTC’s acquisition of Rockwell Collins is actually one of the biggest such deals in the history of the aerospace industry. This newly combined unit will employ 70,000 people across 300 sites around the world; for a combined estimated annual sales of roughly $23 billion.
That in mind, UTC raised its revenue outlook for the year from $64 – $64.5 billion to $64.5 – $65 billion. It also cut its profit guidance from a range of $7.20 – $7.30 per share to $7.10 – $7.20 per share.