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UTX buying Sundstrand
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February 22, 1999: 8:35 a.m. ET
Transaction valued at $70 a share, or $4.3B, forms airframe component giant
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NEW YORK (CNNfn) - United Technologies Corp. agreed to acquire fellow aerospace component maker Sundstrand Corp. for $4.3 billion in cash and stock. the companies said Monday.
Under terms of the deal, Sundstrand (SNS) holders will receive $70 a share -- $35 cash and 0.279 share of United Technologies (UTX), which would be valued at $35 a share based on Friday's closing stock prices.
Sundstrand closed Friday at 58, up 6-5/8. United Technologies closed at 125-7/16, up 2-3/8.
The transaction can be adjusted to increase the stock payment to a value of $39.25 a share, or a total value of $74.25 a share, depending on United Technologies' stock price. The deal could be converted to an all-cash $70-a-share transaction if UTC stock falls below $112.89 a share during a specific period before Sundstrand shareholders meet to consider the offer.
The companies said Sundstrand (SNS) will be combined with United Technologies' (UTX) Hamilton Standard division to form Hamilton Sundstrand, a leading maker of airframe components and sub-systems.
On completion of the deal, Sundstrand Chairman Robert Jenkins will become chairman of Hamilton Sundstrand. Ray Kurlak, currently president of Hamilton Standard, will be president of the newly formed entity.
United Technologies said it expects the deal to be slightly accretive to earnings this year, with that accretion accelerating in subsequent years. However, the company said its expectations of 15 percent annual earnings per share growth is unchanged.
"This acquisition reinforces our long stated strategy of augmenting UTC's world-class aerospace and commercial franchises," said United Technologies Chairman George David. "Hamilton Sundstrand will have expanded aftermarket opportunities, improved economies of scale, and leveraged opportunities for top-line growth."
The companies said they expect the deal to reduce costs by between 3 percent and 5 percent over the next five years.
Besides Sundstrand holders, the deal requires approval by U.S. and European regulators. The companies said they expect to complete the transaction by the middle of the year. 
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