BOSTON (Reuters) - United Technologies Corp (UTX.N) could announce plans in March to sell some of its fire and security unit’s installation businesses to raise money ahead of its largest-ever takeover, a top executive said.
That unit, built up through a series of 61 acquisitions over the past nine years, is reviewing its portfolio and the Hartford, Connecticut-based company plans to disclose its decision at a March 15 investor meeting, said Chief Financial Officer Greg Hayes.
“Some of the fire security products are probably turning out to be much better than some of the installation businesses,” Hayes told investors on a conference call after the company reported better-than-expected fourth-quarter results.
“I will tell you that fire (detection and suppression equipment) is core and we’ll take a look at the rest of it. I just don’t want to get ahead of ourselves because we have got some good service and installation businesses around the world that perform very well and we have some that don’t perform as well,” Hayes said.
Geraud Darnis, who heads the company’s new climate, controls and security systems unit, “just needs to figure out whether or not they are fixable and what the long-term growth prospects are before we make any decisions,” Hayes said.
The review has taken on a new sense of urgency as Chief Executive Louis Chenevert pushes to limit the amount of new shares that United Tech will need to issue to close its $16.5 billion takeover of Goodrich Corp GR.N later this year.
“We don’t like to issue equity but at the same time we want to maintain our credit rating,” Hayes said in an interview with Reuters. “In these kind of crazy times in the credit market, the last thing I want to do is lose my credit rating. It’s not because a downgrade costs me a lot in terms of additional interest expense, it’s really because it costs me access to the commercial paper market, which we’re in every day.”
United Tech currently has an “A” credit rating from Standard & Poor’s -- not top shelf, but solidly investment-grade.
Analysts have estimated the company will sell businesses that generate about $1.5 billion in revenue -- about 2.5 percent of the company.
One option that’s not on the table is a sale of United Tech’s Sikorsky helicopter arm, Hayes said.
“There’s been talk about Sikorsky on and off for years but I’ll tell you Sikorsky is a core asset for UTC,” Hayes said. “We can probably but that speculation to bed.”
Reporting By Scott Malone; Editing by Derek Caney