Manufacturer Honeywell held merger meetings with United Technologies, reports CNBC today. The deal between the two aerospace giants could have serious consequences for the commercial space travel industry, and for everyday consumers. The deal would see Honeywell acquire United Technologies, who manufactures aircraft engines and the ubiquitous Otis brand elevators. Additionally, United Technologies competes with Honeywell in the heating and climate control industries, the merger could see some interesting development with Honeywell hard pressed by the popular Nest thermostat.
So, what does that mean for consumers? Two businesses, which have been struggling in recent years, could potentially form one of the most influential partnerships in international industry – not exactly riveting stuff, but Honeywell supplies aircraft parts to Boeing, and likely made at least one product in your household right now.
Fortune reports that the talks don’t quite indicate that a deal was made, but it looks promising. Honeywell reportedly offered to buy United Technologies with stock, and sweetened the pot with a little cash. While everyday consumers won’t likely notice a difference in their day to day lives, it’s important to note that both companies have a strong presence in the United States and abroad – simply put, they’re big employers, and a merger could mean less competition for skilled workers, but it might mean more jobs for those workers given that United Technologies has been cutting jobs recently.
Still, CNBC is skeptical a potential deal — if a deal is reached — would resist antitrust scrutiny from federal regulators. Both companies operate in different industries, but they also compete in a few specific areas, most notably home climate control.
It’s not the first time Honeywell has tried to acquire United Technologies, though. According to CNBC last year, Honeywell made a similar offer, United Technologies refused out of hand. It’s been a rough year for United, though, and their stock price is now well below Honeywell’s, and now that the deal is on the table again, Honeywell finds itself in a much more advantageous position.
Last year, talks broke down when neither company could agree on which one would be in control if a deal went through, but today the tables have turned, and Honeywell may have the leverage it needs to entice United Technologies management to accept a merger.
“The current talks represent the latest engagement in an on-again-off-again courtship that began almost a year ago, and has changed shape as the respective market caps of the two companies have diverged,” reports David Faber for CNBC.
Since the last time a deal was attempted, Honeywell’s market value grew almost $10 billion over United Technologies’ market value, giving it a significantly better position to negotiate this kind of merger.
The deal, if it went through, would be the biggest in recent memory, outpacing last year’s massive merger between DuPont and Dow Chemical, two longtime rivals who merged in hopes of staving off the worst of an economic downturn.
The opposition to the deal might not come from within United Technologies, however. Honeywell and United both provide parts to Boeing and Airbus, and if the two companies merged, they’d be in a position to hike up the price of their aircraft components — a move which airplane manufacturers would naturally be opposed to.
Both companies design and manufacture many of the internal systems that go into commercial and military aircraft, including engines and avionics. But both companies provide different components to major aircraft manufacturers, and a merger would meet some major opposition in both the United States and the European Union, both of which have been tough on this kind of merger in recent years.
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