Boeing Ends Objection to United Technologies, Rockwell Merger
March 19 2018 - 3:01PM
Dow Jones News
By Doug Cameron
Boeing Co. dropped an opposition to plans for two of its largest
suppliers to merge, reflecting pressure on the aerospace industry
to deliver its record backlog of jetliners.
Chicago-based Boeing last year criticized plans by United
Technologies Corp. to buy Rockwell Collins Inc. for $23 billion and
consolidate its position as the world's largest aerospace supplier
by sales.
Boeing said Monday it now backed the combination, while United
Technologies and Rockwell Collins said they have also signed up for
the plane maker's cost-cutting program.
"At a time of record industry production, it is critically
important that we have business arrangements with all of our
suppliers that drive increased focus on meeting their cost,
schedule and quality commitments to Boeing and our customers," the
plane maker said.
Boeing executives said last year they may cancel or amend some
contracts if the deal went through, arguing that the combination
could undermine competition in the aerospace supply chain.
The companies didn't disclose details of their agreements,
though Boeing had previously said it would look to secure some of
their synergies. United Technologies expects the deal to close this
year, subject to regulatory approvals.
A day after the plan was made public last year, Boeing said it
was "skeptical" the transaction would benefit its airline
customers. Both Airbus SE and Boeing also privately lobbied two
years ago against unsuccessful plans by Honeywell International
Inc. to acquire United Technologies, according to people familiar
with the situation. But Honeywell's $15 billion aerospace unit had
far more product overlap with United Technologies.
Airbus has recently expressed misgivings about the proposed
takeover of aerospace parts maker GKN PLC by U.K.-based turnaround
specialist Melrose Industries PLC. Airbus also expressed concern
Melrose had short-term financial incentives that aren't suited to
the long-term investment returns of the aerospace industry. Melrose
denied the claim and said it invested heavily in research and
development.
Robert Wall contributed to this article.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
March 19, 2018 14:46 ET (18:46 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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