ROCKWELL COLLINS ACQUISITION

United Technologies weighs 3-way breakup with decision this year

Building 124 on the Rockwell Collins headquarters campus is seen in Cedar Rapids on Wednesday, Jan. 10, 2018. (Rebecca F
Building 124 on the Rockwell Collins headquarters campus is seen in Cedar Rapids on Wednesday, Jan. 10, 2018. (Rebecca F. Miller/The Gazette)
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United Technologies Corp. is considering a breakup.

The manufacturer is studying a plan to split a portfolio that includes jet engines, elevators and air conditioners, CEO Greg Hayes said Wednesday at an investor conference.

A decision will be announced by the end of the year, he said.

“Is UTC a more valuable property together or is UTC better off in three separate businesses?” Hayes said at a Barclays conference in Miami.

“That’s the question for the board. That’s the question we continue to study.”

The comments mark a shift for Hayes, who previously has downplayed questions about whether the company would separate its businesses.

UTC, with a market value of $103 billion, becomes the latest industrial conglomerate to explore such a move after General Electric Co. said it may split its businesses apart.

UTC is taking a fresh look in the mirror as its aerospace operations are poised for a substantial overhaul from a blockbuster merger with Cedar Rapids-based Rockwell Collins and stepped-up production of a new Pratt and Whitney jet engine.

Any portfolio change would come after the company completes the Rockwell deal, slated to close this year.

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In the event of a split, Hayes sees an aerospace business with about $45 billion to $50 billion in sales, Hayes said. The Otis elevators operation would have about $12 billion to $13 billion, while the climate-control division, which makes Carrier air conditioners, would have $17 billion to $18 billion.

A breakup could result in “significant dis-synergies” when splitting shared services such as payroll processing or tax management, the CEO said.

While UTC hasn’t been the target of a public activist campaign, analysts have said it’s a potential candidate.

Barclays analyst Julian Mitchell said in a Feb. 14 note that the Farmington, Conn.-based company was one of the likeliest targets, along with Eaton Corp. and Johnson Controls International.

At an investor meeting last May, Hayes said he thought of himself as his own activist. While he said at the time that a breakup wasn’t under consideration, he left the possibility open, saying “we’ll keep the portfolio together until we don’t.”

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