United Technologies Corp, owner of jet-engine maker Pratt & Whitney, has made progress in its talks to acquire aircraft component manufacturer Rockwell Collins Inc as it seeks to bulk up its aerospace business, a person familiar with the matter said on Tuesday.
The two companies are close to agreeing on an acquisition price and could announce a deal as early as next week, said the source, who asked not to be identified because the negotiations are confidential.
The person did not comment on a possible price. The Wall Street Journal reported earlier on Tuesday that the companies were discussing a per-share price for Rockwell Collins of $140 or less.
Rockwell shares were up 2 percent at $130.54 at midday on Tuesday, giving the company a market capitalization of around $21 billion. United Technologies shares were up 1.7 percent at $117.28.
United Technologies, which also owns Otis Elevator and air-conditioner maker Carrier, declined to comment. Rockwell Collins did not immediately respond to requests for comment.
United Technologies and Rockwell Collins have been trying to hammer out a deal for more than a month. Reuters reported on Aug. 4 that United Technologies had made an offer for Rockwell.
A combination of the two large aerospace suppliers would meld Rockwell`s commercial and military aircraft avionics business with United Technologies` broad portfolio that includes aircraft engines, structures, cockpit and cabin controls, ventilation systems and other electronic and mechanical devices used in aviation.
United Technologies` Pratt & Whitney engine unit has had production problems with its new Geared Turbofan engine, prompting delays of new Airbus A320neo aircraft. United Technologies also has noted weakness in demand for Otis elevators, particularly in China, which has weighed on results.
In April, Rockwell acquired B/E Aerospace, a maker of aircraft seats, lavatories and galleys, a deal that broadened its product lines but drew questions from analysts and investors who saw little logic in combining the two businesses.
Rockwell expanded its avionics business with a deal to provide aircraft data networking services, known as FOMAX, for all new Airbus A320 aircraft starting in 2018.
A deal with United Technologies would open the way for Rockwell to capitalize on "connected aircraft" that can transmit sophisticated data about onboard systems, routes and weather, allowing airlines to improve operations and maintenance.
It would also give Farmington, Connecticut-based United Technologies, which has a market capitalization of $94 billion, the option of separating aerospace from the company`s other industrial units.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)