(For more Reuters DEALTALK stories, click on [DEALTALK/])
* United Tech CEO Chenevert proposed takeover year ago
* Goodrich's desire for all-cash simplified deal structure
* Rockwell Collins was not a serious consideration-sources
* Talks paused in Aug amid turmoil, revived later -sources
By Soyoung Kim and Paritosh Bansal
NEW YORK, Sept 22 Three years ago after an
aborted hostile bid for teller machine maker Diebold Inc
(DBD.N), United Technologies Corp (UTX.N) Chief Executive Louis
Chenevert pledged he would put forward a friendly face the next
In striking a $16.5 billion deal to acquire aircraft
systems maker Goodrich Corp GR.N on Wednesday, Chenevert made
sure he got Goodrich's Marshall Larsen on his side.
Chenevert's courtship started more than a year ago, when he
first broached the possibility of a takeover to Larsen, people
familiar with the matter said.
The chemistry between the two played a big role in the
companies reaching a deal, according to the people. Although it
was an all-cash takeover, Chenevert invited Larsen to the deal
announcement and also has given him the task of running the
combined aerospace systems business for United Technologies.
"This is one that has been on the radar screen, and I think
it has been in the works for over a year between Marshall and
I," Chenevert said. "It's going to be a happy transition."
Larsen added: "During this time period where we've got to
know Louis and United Technologies better, we've come to the
belief that our cultures are not different."
Goodrich, which makes equipment for large planes such as
landing gear, wheels and brakes, and smaller aerospace
component manufacturer Rockwell Collins Inc (COL.N), were both
seen for many years as attractive takeover targets for United
Technologies as it looked to boost its commercial aerospace
exposure. Its aerospace business has lagged growth in its
commercial building units, which include Carrier air
conditioners, Otis elevators and fire and security systems.
The Hartford, Connecticut, diversified conglomerate set its
eyes firmly on Goodrich, which has solid exposure to key
commercial plane programs such as the Boeing (BA.N) 787
Dreamliner and upcoming Airbus EAD.PA A320neo and is
benefiting from the upswing in plane orders.
While Goodrich derives two-thirds of sales from commercial
aerospace, Rockwell relies on its government division for
roughly 60 percent of sales and has been under pressure from
defense contract delays and program cuts.
"We don't discuss our acquisition target but obviously we
love aerospace," Chenevert said. "We felt very good that on the
list of opportunities this was absolute top of the list."
United Technologies and Goodrich came close to a deal in
early August, but the discussions were put on hold for several
weeks as both companies' stock prices swung widely amid the
broader market turmoil, people familiar with the matter said.
Talks were reinvigorated in recent weeks and United
Technologies then focused on lining up $15 billion in financing
to seal the deal, the people said.
JPMorgan Chase (JPM.N), which is the lead adviser for
United Technologies, has committed financing along with Bank of
America Corp (BAC.N) and HSBC Holdings Plc (HSBA.L).
Goldman Sachs Group Inc (GS.N), while it did not
participate in the deal discussions, also had a relationship
with United Technologies and was later added as its financial
adviser, people familiar with the matter said. Goldman
representatives were not immediately available for comment.
Designation as an adviser on deals help banks rake in
credit in M&A league tables, a powerful marketing tool in the
investment banking business. JPMorgan is currently the top M&A
adviser in deals involving U.S. companies, Thomson Reuters data
"There's a whole cadre of banks that are sending me e-mails
and calling my phone, it's coming off the hook because people
want to be involved in the financing of this transaction. We'll
see where it goes long-term, it's premature to call the shot
here," Chenevert said.
Law firm Wachtell, Lipton, Rosen & Katz served as legal
adviser to United Technologies. Goodrich was advised by Credit
Suisse CSGN.VX, Citigroup Inc (C.N) and law firm Jones Day.
(Reporting by Paritosh Bansal and Soyoung Kim, additional
reporting by Andrea Shalal-Esa in Washington and Scott Malone
in Boston, editing by Matthew Lewis)