United Technologies Plans to Separate Into Three Independent Companies
FARMINGTON, Conn. — United Technologies Corp. completed its acquisition of Rockwell Collins and announced its 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 — formed through the combination of UTC Aerospace Systems and Rockwell Collins — and Pratt & Whitney, will be a systems supplier to the aerospace and defense industry; Otis, a manufacturer of elevators, escalators, and moving walkways; and Carrier, a global provider of HVAC, refrigeration, building automation, fire safety, and security products with leadership positions across its portfolio.
"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 Gregory Hayes, United Technologies chairman and CEO . "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."
The proposed separation is expected to be effected through spin-offs of Otis and Carrier that will be tax-free for UTC shareowners 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.
Hayes will oversee the transition and will continue in his current role as UTC chairman and CEO following the separation.
The three independent companies will be appropriately capitalized with the financial flexibility to take advantage of future growth opportunities. Each business will be better positioned to pursue a capital allocation strategy more suitable to its respective industry and risk and return profile, and enjoy greater flexibility with an independent equity currency and more appropriately aligned management and employee incentives. UTC's commitment to strengthening its credit metrics remains unchanged. Each independent company is expected to have a strong balance sheet and to maintain an investment grade credit rating. Any existing or potential liabilities that are not associated with a particular entity will be allocated appropriately to each of the businesses.
The separation is expected to be completed in 2020, with separation activities occurring within the next 18-24 months.
Publication date: 11/27/2018