Investopedia: Will United Technologies Land Goodrich?

The economy may be slowing and Europe may still be smoldering, but none of that precludes good ol' fashioned buyout speculation. The latest big-deal rumors swirl through the aerospace industry, where United Technologies (NYSE:UTX) is widely rumored to be trying to strike a deal to acquire aircraft parts and components manufacturer Goodrich (NYSE:GR).


The Deal That May Be
If rumors are true, United Technologies has been busy lining up many billions in financing to launch a bid (rumors range from $10 billion to $20 billion). As it pertains to Goodrich, the target price for a deal seems to be in the range of $110 to $125 - prices that would be from 18 to 35% higher than Friday's close (a close that was bolstered by the deal rumors hitting the market on Friday).

Taking the midpoint of that range, United Technologies would be paying about 12 times trailing EBITDA for Goodrich. Though there have not been major aerospace deals in a while, that price would not be out of line for a deal like this; it overvalues Goodrich on a standalone basis, but United Technologies should be able to pull multiple operating synergies out of the deal, as well as expand into new market opportunities.


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