United Technologies Corp. won U.S. antitrust approval for its acquisition of Rockwell Collins Inc. to create an aircraft-parts giant.
The Justice Department signed off on the $23 billion deal after the companies agreed to sell assets to resolve the government’s concerns the deal would otherwise harm competition, the U.S. said in court papers filed Monday in Washington.
The deal, announced last year, is one of the biggest in aviation history. It marries United Technologies’ Pratt & Whitney jet engines with Rockwell Collins’s cockpit technology and interiors. The acquisition will give United Technologies the scale and negotiating power to counter pressure from planemakers Boeing Co. and Airbus SE for discounts.
Given the worldwide scope of the companies’ activities, the combination requires international approvals. Besides the U.S., it has won approval in Brazil and the European Union.
The deal has yet to win approval in China, which has sparked concern from some investors that it could be held up as trade tensions between the U.S. and China intensify. United Technologies’ Chief Executive Officer Greg Hayes said last month that Chinese officials were waiting for the U.S. Justice Department to sign off.
‘Latest Milestone’
“The process for closing on Rockwell Collins is moving forward, with the recent U.S. Department of Justice approval being the latest milestone,” United Technologies spokeswoman Michele Quintaglie said in an email. “Once we have received all of the necessary approvals, we will announce the final closing of this transaction.”
Rockwell Collins referred questions to United Technologies.
With the acquisition, valued at $30 billion including the assumption of debt, United Technologies is increasing its bet on commercial-aircraft systems, where it has stumbled recently with the rocky rollout of a new jet engine that cost $10 billion to develop. The aerospace market accounts for about half of sales at the Farmington, Connecticut-based manufacturer, with the rest coming from elevators, air conditioners and other building systems.
Accelerated industry consolidation comes as suppliers face pressure from airframe manufacturers to reduce costs and boost production rates to support faster output of narrow-body jetliners such as Airbus’s A320 and Boeing’s 737.
Under the proposed settlement with the U.S., which requires court approval, Rockwell Collins will sell two businesses: the pneumatic ice-protection systems, which removes ice from aircraft wings, and trimmable horizontal stabilizer actuators, which help an airplane maintain proper altitude. Without the sales, the merger would reduce competition in the two markets, the Justice Department said.
The case is: U.S. v. United Technologies Corp., 18-cv-2279, U.S. District Court, District of Columbia (Washington).
Source: Bloomberg.com