Suit challenges proposed United Technologies-Rockwell Collins deal

A class action suit filed by a stockholder claims the proposed acquisition of Rockwell Collins by United Technologies Corp. has violated the Securities Exchange Act by not disclosing certain information regarding Rockwell's financial projections.

The suit, filed in U.S. District Court last week by Ted Sharpenter, a Rockwell stockholder, claims Cedar Rapids-based Rockwell and its 11 directors, along with UTC and parent company, Riveter Merger Sub Corp., didn't include all the essential facts in its public-disclosure statement.

Among other issues, the suit specifically claims the statement didn't reveal certain information when preparing financial projections, which makes the registration statement false and misleading to shareholders.

Sharpenter brought the suite on behalf of himself and other Rockwell public stockholders, according to the suit. The suit points out there were about 174,981,559 shares of common stock issues and outstanding held by 'hundreds, if not thousands, of individuals and entities scattered throughout the country.”

The suit also claims there are no financial projections for UTC, despite the fact that about one-third of the merger consideration that Rockwell's stockholders will receive is parent stock.

Pamela Tvrdy-Cleary, Rockwell spokeswoman, said Tuesday the company doesn't comment on pending litigation.

Robert Miller, University of Iowa College of Law professor, described the filing Tuesday as a 'typical” disclosure suit to challenge a proposed merger. The suit essentially challenges how the financial projections were created, but it's impossible to know the future cash flow of a company, Miller pointed out.

The majority of disclosure complaints are dismissed or a few are settled, he added.

The proposed acquisition of Rockwell by UTC, a Connecticut company, has been called the biggest aerospace deal in history.

UTC announced in September plans to acquire Rockwell Collins for $23 billion, before debt. Including the assumption of Rockwell's debt, the acquisition is valued at $30 billion, according to a news release.

Rockwell makes avionics technology, such as radar systems and recently acquired a company that manufactures interior products, such as airline seats. A division of United Technologies makes aircraft engines and other parts.

Once complete, Rockwell and a segment of UTC will combine into a new division named Collins Aerospace Systems. The location of that headquarters has not been determined.

The acquisition is expected to close within the third quarter of 2018.

l Comments: (319) 398-8318; trish.mehaffey@thegazette.com