United Technologies in anticipated $40.3 billion stock acquisition

The United Technologies Corporation is expected to buy Honeywell International for about $40.3 billion in stock, according to executives close to the talks.

Both boards are planning to meet today, October 20, the executives said. The companies acknowledged yesterday that they were in talks, but declined to comment further. The executives said the companies hoped to announce the deal as early as practicable.

The acquisition would create an industrial behemoth, bringing together United Technologies’ Otis Elevators, Pratt & Whitney aircraft engines, Sikorsky helicopters and Carrier air-conditioners, with Honeywell’s aerospace systems, power and transportation products, speciality chemicals and home security systems.

According to the executives, United Technologies has offered about 0.74 of a share, or $50.32, for each of the about 801 million outstanding shares of Honeywell, making the total purchase price $40.3 billion.

The offer represents a 39 percent premium above Honeywell’s close yesterday, October 19, of $36.13, up $2.44 Shares of United Technologies closed down 38 cents at $68.

George David, the chairman and chief executive of United Technologies, would be chief executive of the combined company, while Honeywell’s chairman and chief executive, Michael Bonsignore, would become chairman, the executives said.

The companies hope to save about $1 billion annually by combining, the executives said, and add as much as 25 cents a share to earnings the first year after the merger.

Although analysts had not predicted the deal, few were surprised by it. Wall Street had for some time been expecting United Technologies to announce an acquisition, and Honeywell’s name has often made it onto the short list of possibilities.

‘They are both major players in the same industries, and while there’s lots of overlap in customers, there is surprisingly little overlap in their products,’ said an analyst who covers both companies. The expected merger comes less than 17 months after Honeywell was formed, the product of a merger between Honeywell and the Allied Signal Corporation.