United Technologies Corp. (UTC) announced the completion of its acquisition of Rockwell Collins and the company’s intention to separate its commercial businesses, Otis and Carrier (formerly CCS), into independent entities. The separation will result in three global companies:
United Technologies, comprised of Collins Aerospace Systems and Pratt & Whitney, will be a systems supplier to the aerospace and defense industry; Collins Aerospace was formed through the combination of UTC Aerospace Systems and Rockwell Collins; Otis, a global manufacturer of elevators, escalators and moving walkways; and Carrier, a global provider of HVAC, refrigeration, building automation, fire safety and security products.
“Our decision to separate United Technologies is a pivotal moment in our history and will best position each independent company to drive sustained growth, lead its industry in innovation and customer focus, and maximize value creation,” said United Technologies Chairman and Chief Executive Officer Gregory Hayes. “Our products make modern life possible for billions of people. I’m confident that each company will continue our proud history of performance, excellence and innovation while building an even brighter future. As standalone companies, United Technologies, Otis and Carrier will be ready to solve our customers’ biggest challenges, provide rewarding career opportunities, and contribute positively to communities around the world.”
Overview of Three Leading Companies:
- United Technologies (UTC), comprised of Collins Aerospace and Pratt & Whitney, will be a systems supplier to the high-growth commercial aerospace and defense industry, with a portfolio of technologies and scale to invest through economic cycles. Combined sales of the two businesses totaled $39.0 billion in 2017 on a pro forma basis. Collins Aerospace supplies electrical, mechanical and software solutions across all major segments of the aerospace industry and serves commercial and military customers. Pratt & Whitney is a global leader in aircraft propulsion with a growing number of engine programs including the revolutionary Geared TurbofanTM commercial engine and the F135 military engine for the F-35 Joint Strike Fighter program.
- Otis Elevator Company is a manufacturer of people-moving products, including elevators, escalators and moving walkways, with significant recurring revenue from long-term maintenance contracts and $12.3 billion in 2017 sales. Founded 165 years ago, Otis has a history of global leadership with products and services offered in nearly every country in the world. Otis, with more than two million elevators under maintenance, has the largest aftermarket service portfolio of any elevator manufacturer. Recent investments include digitally-enabled field service capabilities, positioning Otis for continued growth.
- Carrier is a global provider of HVAC, refrigeration, fire, security and building automation technologies with 2017 sales of $17.8 billion. Supported by the Carrier name, the company’s portfolio includes brands such as Carrier, Kidde, Edwards, LenelS2 and Automated Logic. Carrier’s businesses enable modern life, delivering efficiency, safety, security, comfort, productivity and sustainability across a wide range of residential, commercial and industrial applications. Through accelerated innovation, the company has released more than 200 new products over the last two years.
The proposed separation is expected to be effected through spin-offs of Otis and Carrier that will be tax-free for UTC share owners for U.S. federal income tax purposes. Each spin-off is subject to the satisfaction of customary conditions, including final approval by UTC’s Board of Directors, receipt of a tax opinion from counsel, the filing and effectiveness of a Form 10 registration statement with the U.S. Securities and Exchange Commission and satisfactory completion of financing.
Gregory Hayes will oversee the transition and will continue in his current role as UTC Chairman and CEO following the separation.
The separation is expected to be completed in 2020, with separation activities occurring within the next 18-24 months.