United Tech plans to sell wind power and rocket engine businesses

By Editor

Share

United Tech plans to sell wind power and rocket engine businesses

By Greentech Lead America: United Technologies announced
that it will sell its rocket engine and wind power businesses to help finance
its $16.5 billion purchase of aerospace supplier Goodrich Corp.

The companyt will sell Pratt & Whitney Rocketdyne,
Clipper Windpower and its three industrial businesses at its Hamilton
Sundstrand aerospace components manufacturer and expects to raise $3 billion
from the sales.

The proposed acquisition of Goodrich is company’s biggest
acquisition ever. United Technologies anticipates the acquisition of Goodrich
will strengthen its position in the growing aerospace industry. The acquisition
is expected to close by the middle of the year.

The sale of Rocketdyne, owned by United Technologies for
seven years, is partly in response to the end to NASA’s 30-year space shuttle
program last July. According to analysts, the sale of Rocketdyne represents the
“end of an era” in space travel.

The company decided to sell Clipper because the
alternative energy business has stalled. “We’ve gone into this business
with the thought that there was going be a renewable energy mandate in this
country and there has not been one,” said chief financial officer Greg
Hayes.

Alternative energy has stagnated with booming natural gas
exploration. The nation’s supplies are bulging and natural gas is cheap. By
comparison wind power is less economical than many thought it would be two
years ago, the company said.

In addition to selling some of its businesses, United
Technologies will take on $8 billion to $10 billion in short- and long-term
debt to finance the Goodrich deal. It also will use $3 billion in cash and $1.5
billion in mandatory convertible issues.

According to Associated Press restructuring
costs associated with buying Goodrich, interest and other costs will total $195
million, or 25 cents per share, in 2012. The Goodrich acquisition is expected
to add 50 to 55 cents per share to earnings in 2013.

editor@greentechlead.com

Latest News

Related