United Technologies Announces Intention to Separate Into Three Independent Companies
United Technologies Corporation (UTC) announced yesterday, Nov. 26, the completion of its acquisition of Rockwell Collins and the company’s intention to separate its commercial businesses, Otis and Carrier, into independent entities.
The separation will result in three companies: United Technologies, comprised of Collins Aerospace Systems and Pratt & Whitney, with Collins Aerospace being formed through the combination of UTC Aerospace Systems and Rockwell Collins; Otis, a manufacturer of elevators, escalators and moving walkways; and Carrier, a provider of HVAC, refrigeration, building automation, fire safety and security products.
“Our decision to separate United Technologies is a pivotal moment in our history and will best position each independent company to drive sustained growth, lead its industry in innovation and customer focus, and maximize value creation,” said Gregory Hayes, UTC chairman and CEO. “Our products make modern life possible for billions of people. I’m confident that each company will continue our proud history of performance, excellence and innovation while building an even brighter future. As standalone companies, United Technologies, Otis and Carrier will be ready to solve our customers’ biggest challenges, provide rewarding career opportunities and contribute positively to communities around the world.”
The proposed separation is expected to be effected through spin-offs of Otis and Carrier that will be tax-free for UTC shareowners for U.S. federal income tax purposes. Each spin-off is subject to the satisfaction of customary conditions, including final approval by UTC’s board of directors, receipt of a tax opinion from counsel, the filing and effectiveness of a Form 10 registration statement with the U.S. Securities and Exchange Commission and satisfactory completion of financing.
Gregory Hayes will oversee the transaction and will continue in his current role as UTC chairman and CEO following the separation.
Following separation, the three companies together are initially expected to pay a quarterly dividend that is in sum no less than 73.5 cents per share, although each company’s dividend policy will be determined by its respective board of directors following the completion of the separation. Until the planned transactions are completed, UTC expects to continue to pay a quarterly dividend of no less than 73.5 cents per share.
The separation is expected to be completed in 2020, with separation activities occurring within the next 18-24 months.