September 22, 2011 7:12 PM
Wachtell, Jones Day Lead as United Technologies Buys Goodrich for $18.4 Billion
Posted by Tom Huddleston Jr.
United Technologies Corporation said Thursday that it will pay $18.4 billion for aircraft equipment maker Goodrich Corporation in a deal that would be the conglomerate's largest-ever acquisition.
Hartford-based United Technologies said that the transaction's terms call for it to pay $127.50 per Goodrich share in cash to acquire the target company and to assume $1.9 billion in Goodrich debt. The offer represents about a 47 percent premium over the closing price of Goodrich shares on September 15—the day before the stock began rising on speculation that a deal was imminent, according to Reuters.
Goodrich—which was founded in Akron, Ohio, and is now based in Charlotte, North Carolina—makes aircraft landing gear, wheels, and brakes for the aerospace and defense industries. Formerly known as B.F. Goodrich Company, the company was known through most of the twentieth century for its tires. It exited that business in 1988. United Technologies said it expects Goodrich's 2011 sales to be about $8 billion.
United Technologies hired longtime outside counsel Wachtell, Lipton, Rosen & Katz to advise on the matter. The Wachtell team is being led by firm cofounder Martin Lipton, along with corporate partners Joshua Cammaker and David Lam. Wachtell has advised United Technologies on a number of previous transactions, including the conglomerate's $1.8 billion acquisition of General Electric's fire alarm and security unit in 2009, and an unsuccessful hostile bid for automated teller machine maker Diebold Incorporated in 2008.
Other Wachtell lawyers working on the deal include restructuring and finance partner Eric Rosof, tax partner T. Eiko Strange, and executive compensation partners Jeannemarie O'Brien and Jeremy Goldstein. Partners Michael Byowitz and Joseph Larson are advising on antitrust issues.
Crowell & Moring is serving as United Technologies's U.S. antitrust cocounsel with a team led by antitrust cochair Wm. Randolph Smith along with counsel Shawn Johnson.
Jones Day is advising Goodrich on the deal with a team led by M&A partners Lyle Ganske and James Dougherty. Antitrust partner Tom Smith and benefits partner Manan "Mike" Shah are also working on the transaction. Goodrich turned to Jones Day for the 2002 spin-off of an industrial products division that became EnPro Industries, Inc. (Ganske and Dougherty also advised Diebold, opposite Wachtell, on that company's defense against United Technology's hostile bid three years ago.)
United Technologies plans to merge Goodrich's operations with its own aerospace division, with the Goodrich chairman Marshall Larsen heading the combined unit, according to the United Technologies statement announcing the deal.
Bloomberg reports that United Technologies has been circling Goodrich for several years. The company will finance three-quarters of the purchase with new debt. Company officials told Reuters the company plans to cut back on M&A activity and share repurchases over the next couple of years as it absorbs Goodrich.
United Technologies, which operates the aviation brands Sikorsky (helicopters) and Pratt & Whitney (jet engines), expects the deal will add to earnings within two years of completion. The deal is expected to close by the middle of next year, subject to shareholder and regulatory approval.
Simpson Thacher & Bartlett advised J.P. Morgan Securities in its role as a financial adviser to United Technologies; Dewey & LeBoeuf represented Citigroup in its roles as a financial adviser to Goodrich.Make a comment