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The aerospace firm, which has a large office in Wilsonville, also recently secured a $30.7 million defense contract in early October

Amid major consolidations across the transportation industries, one of the biggest ever mergers in the aerospace business according to The Economist is happening to a local avionics firm.

United Technologies is acquiring Rockwell Collins, an aerospace engineering firm in Wilsonville, for $30 billion.

Rockwell Collins is known for engineering head-up guidance displays, the green laser overlay on plane windshields that gives exact technical information to pilots. It has 30,000 employees worldwide, is headquartered in Cedar Rapids, Iowa and many aircrafts use its head-up display including the Boeing 737.SUBMITTED: ROCKWELL COLLINS, COURTESY VINCENT REAP - The defense project will be for a five-year period worth $30.7 million for avionics repair and logistics, field service support and spares management for existing Rockwell Collins Common Avionics Architecture System as well as expanded roles in service and repair chain management for other avionics installed on USSOCOM equipment.

At $140 a share in cash and United Tech stock, the combination is intended to create a premier aerospace systems supplier, combining well-positioned businesses to meet rapidly evolving global customer demands, enhance innovative systems capabilities and integrated digital product offerings including avionics, flight controls and data services, and is expected to generate cost synergies of more than $500 million.

"We are extremely pleased to announce this compelling transaction with UTC which is a testament to the value we have created for Rockwell Collins' employees, customers and shareowners," said Kelly Ortberg, Chairman, President and Chief Executive Officer of Rockwell Collins. "The combination will enable us to compete more effectively for future business through continued investments in innovation, world-class integrated product offerings and the ability to retain the top talent in the industry. We look forward to the next chapter in Rockwell Collins' long and proud history, as part of UTC."

Rockwell Collins, which is expected to continue as Collins Aerospace System, is a leader in aviation and high-integrity solutions for commercial and military aircraft customers and is globally recognized for its leading-edge avionics, flight controls, aircraft interior and data connectivity solutions. In 2017, its estimated sales are more than $8 billion.

"Bringing together Rockwell Collins and UTC Aerospace Systems will enable us to generate more growth and opportunity in aerospace," Rockwell Collins spokesperson Robert Edilson told the Business Tribune. "The industry is seeking aerospace systems that are more integrated, electric, connected and intelligent. We can do this better as a combined company."

The purchase price implies a total equity value of $23 billion and a total transaction value of $30 billion, including Rockwell Collins' net debt. On a pro-forma 2017 basis, United Tech is expected to have global sales of approximately $67 to $68 billion following the transaction, based on estimated results.

"This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems," said United Tech Chairman and CEO Greg Hayes. "Together, Rockwell Collins and UTC Aerospace Systems will enhance customer value in a rapidly evolving aerospace industry by making aircraft more intelligent and more connected. The integrated companies' expertise in developing electrical, mechanical and software solutions will allow us to deliver more innovative products and services."

The merger comes amid United Tech competitor and cRockwell Collin's ustomer Boeing's announcement of creating its own avionics division, meant to compete with Rockwell Collins and Honeywell Aerospace. Boeing is contesting the United Tech purchase of Rockwell Collins, too.

The acquisition requires approval by the U.S. Securities and Exchange Commission, and is expected to go through in Q3 2018.

Defense contract

Like a few local companies — FLIR system's mini drones for the Austrailian Army and Vigor's $1 billion deal for U.S. Army ships come to mind — Rockwell Collins is also picked up a defense contract recently.

In early October, Rockwell Collins was selected to support avionics for a U.S. Special Operations Command (USSOCOM), in which the company has a long history, by the Technology Application Contracting Office (TAKO).

The five-year, $30.7 million contract includes providing avionics repair and logistics, field service support and expanded roles in field service and repair chain management for other installed avionics.

"This agreement extends our successful relationship of supporting the USSOCOM's critical mission as well as our position as a trusted source for technical expertise and logistics management," said Thierry Tosi, vice president and general manager of service solutions for Rockwell Collins. "We'll continue to provide critical support when and where it's needed."

By Jules Rogers
Reporter, The Business Tribune
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