Arab Today, arab today united tech sells unit for 550m
Last Updated : GMT 17:16:53
Arab Today, arab today
Arab Today, arab today

United Tech sells unit for $550m

Arab Today, arab today

Arab Today, arab today United Tech sells unit for $550m

New York - Arabstoday

United Technologies Corp reached a $550 million deal to sell its Rocketdyne space unit to GenCorp Inc, a maker of aerospace propulsion systems, in a deal that will help the diversified US manufacturer fund its largest-ever acquisition. Rocketdyne is one of three units United Tech Chief Executive Louis Chenevert put on the block in March in an effort to raise cash and reduce the amount of new stock the company would need to issue to fund its $16.5 billion takeover of Goodrich Corp. GenCorp, with a $406 million market capitalisation and $929 million in forecast 2012 revenue, said the deal would almost double its size. The companies said on Monday they expect the deal, first reported by Reuters last week, to close in the first half of 2013. Hartford, Connecticut-based United Tech is still working to sell the industrial pumps and compressors business of its Hamilton Sundstrand business, as well as Clipper Windpower. When the company unveiled its plans to buy Goodrich last year, it said it planned to issue $4.6 billion in new shares to help pay for the deal. But shareholders opposed that. In June United Tech sold $1 billion in convertible notes to fund the deal. The company last month said it expected to reach a deal to sell the pumps and compressors operations in the current quarter, with Chief Financial Officer Greg Hayes saying there had been “lots of interest” in the business. Sources have told Reuters the business could be worth up to $3.5 billion. Rocketdyne, the world’s largest manufacturer of liquid-fueled rocket propulsion systems, has been facing an uncertain outlook following the end of the US space shuttle program last year. Industry executives have said consolidation is needed for the space industry to survive a tough environment. The Rocketdyne deal comes more than seven years after United Tech bought the business from Boeing Co for $700 million in cash. Rocketdyne makes liquid rocket motors to launch satellites into space but has also begun to diversify into solar and gasified coal energy technologies. GenCorp’s Aerojet subsidiary and Alliant Techsystems Inc produce solid-fuel rocket motors. Several people familiar with the process told Reuters previously that United Tech received multiple bids for the Rocketdyne business in late March, with GenCorp and private equity firms among the interested parties. Talks resumed in earnest with GenCorp after a prospective deal with a private equity buyer fell through, the sources told Reuters. Defense consultant Jim McAleese said the deal with GenCorp was significant because it would help preserve “a critical, but atrophying, capability since Rocketdyne’s liquid rocket engines power both the Air Force’s Evolved Expendable Launch Vehicle and NASA’s Manned Spaceflight.” He said he did not expect much objection to the deal since it would “immediately strengthen competition, by creating two strong competitors for liquid and solid rocket engines,” the combined Aerojet-Rocketdyne business and Alliant Techsystems. “This is exactly the type of modest consolidation that (the US Department of Defense) has been publicly seeking to increase competition and reduce overhead, which could not be more timely given the growing threat of sequestration,” McAleese said, referring to $500 billion in defense spending cuts that could come in January. GenCorp Chief Executive Officer Scott Seymour said the combined company would be better positioned for a highly competitive marketplace and could provide more affordable products to customers. GenCorp shares rose 7 per cent to $7.23 in early trading. United Tech shares fell 2 per cent to $72.70.  Separately, Japan’s All Nippon Airways said on Monday it had grounded several Boeing 787 Dreamliners after discovering a problem in their engines relating to a gearbox manufactured by United Tech’s Hamilton Sundstrand arm. From gulftoday

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