UTC to Become Aerospace Pure Play With Plan to Split Into 3 Companies
The Climate, Controls & Security (CCS) unit will be renamed Carrier and spun off, as UTC explores divesting its fire and security business.
FARMINGTON, Conn. — United Technologies Corp. (NYSE: UTX) will spin off its Otis elevator division and Carrier building systems business to focus solely on aviation, led by jet engine maker Pratt & Whitney and newly acquired parts maker Rockwell Collins.
In announcing it plans Monday, the company said the Otis and Climate, Controls & Security (CCS) businesses will become independent companies, and CCS will be renamed Carrier. UTC continues to explore the divesture of its fire and security business, according to news reports.
Following the portfolio separation, UTC will operate as a leading aerospace company comprised of Collins Aerospace Systems and Pratt & Whitney businesses, according to the company.
The split will take place as a tax-free spinoff of the Otis and Carrier businesses to existing shareholders. The announcement arrived on the heels of UTC completing its $30 billion deal for Rockwell Collins, which received final regulatory approval from China last week.
In a conference call with investors Tuesday, UTC Chairman and CEO Greg Hayes said “the fire and security field business” within CCS generates “roughly $2.5 billion of sales,” while referencing it as a “roughly 10% margin kind of business.”
During the call, Hayes confirmed there is a process in place to divest the company’s fire and security business.
“The focuses of Carrier going forward is going to be on products and services, not on installation and field. And I think as we think about the portfolio, if we divest or choose to divest of the F&S field business, it will be really to give us a better focus going forward of the products and services portfolio,” he said.
UTC built its Fire & Security unit with purchases including Lenel Systems, an access control and software developer; Chubb, a fire safety and security services business; and Kidde, a British fire and safety company. In September, UTC reached an agreement to acquire S2 Security, a leading developer of unified security and video management solutions.
UTC said it expects splitting up the company will take 18 to 24 months.
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