Topic: How To Invest

Spinoffs, Takeovers and Special Situations Hotline – Friday, April 6, 2018

Article Excerpt

UNITED TECHNOLOGIES CORP., $122.76, symbol UTX on New York, is an industrial conglomerate with four primary businesses: Climate, Controls & Security makes Carrier heating and air-conditioning equipment, and burglar alarms and fire safety products; Pratt & Whitney manufactures aircraft engines; Aerospace Systems makes engine-control systems and other aircraft parts; and Otis makes elevators and escalators. On January 11, 2018, Rockwell Collins shareholders voted to accept a takeover bid by United Technologies for $30 billion. The deal, which is expected to close in mid-2018, will add $15 billion in debt. However, as a result of the recent U.S. corporate tax cut (from a rate of 35% to 21%), United Technologies expects to accelerate repayment of its debt. Meanwhile, hedge funds Third Point Capital and Pershing Square have taken positions in the company. The two activists will likely push it to make changes to its overall structure in order to increase shareholder value. This could involve selling off or spinning off some its businesses. United…