Rockwell soars after United megadeal gets China nod

Bloomberg

United Technologies Corp.
secured approval in China for its $23 billion purchase of aerospace supplier Rockwell Collins Inc., clearing the final hurdle to complete a megadeal that was reached more than a year ago.
Rockwell’s shares jumped as much as 9.4 percent, the most in 7 years, on Friday, and United Technologies gained 3 percent. The decision, posted on China’s State Administration for Market Regulation’s website, comes as a relief to investors who were concerned that the megadeal could be held up as trade tensions between the US and China intensify.
The China nod, less than two months after the companies won US antitrust approval, opens the way for one of the biggest deals in aviation history. The combination marries United Technologies’ Pratt & Whitney jet engines with Rockwell’s cockpit technology and interiors. It will give United Technologies the scale and negotiating power to counter pressure from planemakers Boeing Co. and Airbus SE for discounts.
The transaction is expected to close within three business days, United Technologies said in a statement. The company made more than 40 percent of its 2017 revenue overseas, and China was the final regulatory approval needed after Brazil and the Union European gave the green light.
Rockwell shares were up 9 percent to $141.36 in New York, and United Technologies gained 2 percent to $128.26.
United Technologies will now focus on whether to break up, an idea that has been pushed by activist investor Bill Ackman and another high-profile shareholder, Dan Loeb.
Chief Executive Officer Greg Hayes said as recently as last month that United Technologies would be weighing a possible splitoff after closing the Rockwell Collins deal. The Farmington, Connecticut-based company is considering whether it will form stand-alone aerospace, climate-controls and elevator businesses.
United Technologies’ recent results underscored the pressure to potentially separate the businesses.