Spinoff potential lifts UTX’s appeal

Article Excerpt

UNITED TECHNOLOGIES CORP. $125 (New York symbol UTX; Manufacturing & Industry sector; Shares outstanding: 800.1 million; Market cap: $100.0 billion; Dividend yield: 2.3%; Takeover Target Rating: Low; www.utc.com) aims to complete its acquisition of Rockwell Collins Inc. (New York symbol COL) in the next few months. That firm is a leading maker of aircraft components such as cabin interiors, computerized flight controls and air-to-ground communications equipment. In all, United Technologies will pay $30 billion in cash and stock for Rockwell. The combined company will have annual revenue of about $68 billion. By the end of the fourth year, it expects to cut its annual costs by $500 million. Activist investor Daniel Loeb, through his firm Third Point Management, now owns $1 billion worth of the company’s shares. He wants United Technologies to split into three separate businesses: Otis (elevators); Climate Controls; and Aerospace. The company has put off that action until it completes the Rockwell acquisition. However, the likelihood of a spinoff adds to its…