Rockwell Collins, Inc. (NYSE:COL) may be the subject of a takeover bid from United Technologies Corporation (NYSE:UTX).
It’s no secret that the avionics and information technology services provider has been considering selling itself, and the company is roughly valued at $19 billion. The move would help Rockwell Collins’ CEO Greg Hayes return $22 billion to shareholders in dividends and buybacks.
The move makes sense from a financial standpoint as the company’s stock has surged 28% in 2017, increasing its value. The deal would create no overlap between the two companies as Rockwell Collins , analysts believe.
“The logic of the ability to serve (manufacturers) nose to tail sounds good on paper, but as a practical matter the business doesn’t naturally operate that way, especially on large air transport,” Jeff Sprague and Rob Stallard, analysts at Vertical Research Partners, wrote in a note.
The chance of such a deal coming to fruition is slim because of the fact that UTC set aside a $2 billion placeholder for potential acquisitions for the rest of the year, and any merger would be about $1 billion or half of that, while buying Rockwell Collins would require far more.
Such a move would add $40 billion in revenue to UTC, as well as considerable growth opportunities in the aviation industry.
COL stock grew 3.7% Monday, while UTX shares surged 1.8%.