United Technologies – Will the Break-up Unlock Value?
For over a year, United Technologies (UTX) management has been under pressure from large activist investor, Third Point, to break up the company. Management finally succumbed to that pressure and announced on November 26, that it would indeed move forward with a split.
UTX will spin off its Climate, Control and Security business, Carrier, as well as its elevator manufacturing business, Otis, into separate public companies. The remaining business will be the largest aerospace aftermarkets focused company in the world. With the recent closing of the Rockwell Collins acquisition, it will be ~50% larger than its closest competitor, GE.
Watch the video below to see how much value could be unlocked with the spin-off.
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While the break-up of United Technologies looks like it will unlock value, the stock isn’t on our recommendation list. Want to know out favorite spin-offs? Become a member and get instant access. And don’t forget, we offer a 30 day refund policy.
Awesome post! Question. I’m relatively new to spin-offs and so I began reading a few of what you’ve posted. Tons of insightful stuff. Regarding this analysis, how did you conclude to other Corp. cost of $766, pension of $725, and add. Recurring of $625?
If you could thoroughly explain, that would be super helpful! Thanks once again.
Thanks for the question, George! If you look at UTX’s earnings releases, they disclose “eliminations and other” and “general corporate expenses”. So I added all these up on to get $766 of corp costs that aren’t reflected in segment EBIT. Same analysis for pension. Regarding the additional recurring cost, there will be $350MM of additional recurring costs per management’s guidance.