United Tech, Rockwell deal faces bumpy road to approval, especially in the EU

PARIS/ NEW YORK/ WASHINGTON: US aerospace and industrial company United Technologies Corp faces a long road to win approval for its US$ 23 billion plan to buy avionics maker Rockwell Collins Inc, and the biggest bumps could be in Brussels rather than Washington.

United Tech and Rockwell, who both supply airplane makers, say the overlap in their product lines is relatively small.

Yet opponents of the deal could argue the combination gives the aircraft parts supply company undue market power.

An early sign of trouble came when US plane maker Boeing Co said it intended to take a ‘ hard look’ at the proposed deal.

“Until we receive more details, we are sceptical that it would be in the best interest of- or add value to- our customers and industry,” Boeing said in a statement.

The combined company could make more than 50 per cent of the systems content on a Boeing 787 aircraft, by dollar value, noted Kevin Michaels, president of consulting firm AeroDynamic Advisory, referring to such components as flight controls and air conditioning.

Michaels said he does not see the deal facing an issue from a competitive standpoint as there is virtually no overlap in products between the two companies.

Rockwell’s shares rose 0.3 per cent to US$ 131.00 while United Tech shares fell 5.7 per cent to US$111.21, in part on the warning from Boeing.

There was also a sign that Airbus is preparing to ratchet up pressure behind the scenes.

A source close to the European plane maker told Reuters there were concerns about a ‘disconnect’ between United Technologies and the leadership of its Pratt & Whitney unit. — Reuters