United Technologies Corp. [UTX] yesterday said it plans to sell its rocket motors business and four other businesses as part of a portfolio reshaping as well to improve the financing plan for its pending acquisition of Goodrich [GR] and another business.
The sale of the Rocketdyne unit, which is part of the Pratt & Whitney division, as well as the planned sale of Clipper Windpower, and the Milton Roy, Sullair and Sundyne units of the Hamilton Sundstrand division’s Industrial segment, is expected to generate $3 billion in proceeds. Talk publicly of a potential sale of Rocketdyne began last summer when the unit’s chief mentioned in an interview with the Wall Street Journal that UTC was considering strategic options for the business.
Yesterday’s announcement was confirmation that Rocketdyne is indeed up for sale.
“We are taking the opportunity to reevaluate our portfolio as we enter a transformational stage with the proposed acquisitions of Goodrich and Rolls-Royce’s share in the International Aero Engines joint venture,” Louis Chenevert, chairman and CEO of UTC, said in a statement. “The proceeds from divestitures of non-core businesses will help minimize the equity issuance and reduce dilution from the Goodrich transaction.”
UTC also updated its financial guidance for 2012 to account for the Goodrich deal, which is expected to close this summer, and the planned divestitures.
Sales are now expected to be between $61 billion and $62 billion, up between 9 and 11 percent from 2011. Earlier projections put sales for this year between $59 billion and $60 billion.
Earnings per share (EPS) from continuing operations are expected to be between $5.30 and $5.50, flat to up 4 percent over 2011. The previous projection was for EPS between $5.80 and $6.
Free cash flow in 2012 is expected to equal or be greater than net income.