The spin-off is expected to be completed by 2020. Although the Otis and Carrier businesses are significant in terms of sales, the aerospace division is expected to generate more revenue going forward, especially with the addition of Rockwell Collins. The Rockwell Collins acquisition is expected to be $0.15 to $0.20 accretive to adjusted EPS in 2019.
United updated its 2018 guidance to include the acquisition and now expects sales to come in the range of $64.5 billion to $65 billion versus the previous range of $64 billion to $64.5 billion. The acquisition is expected to be dilutive to adjusted earnings by $0.10, resulting in a lowered adjusted EPS range of $7.10 to $7.20 versus the prior range of $7.20 to $7.30.
United Technologies posts upbeat Q3 results, lifts 2018 profit view
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United has had its share of struggles with the ongoing trade tensions and tariffs impacting its business and leading to price increases. Activist investors Dan Loeb of Third Point and William Ackman of Pershing Square Capital Management had called for a split of the company’s businesses earlier this year.
United is not alone in its separation strategy. The company’s peer General Electric (GE) is also offloading several of its businesses to deal with a heavy debt load and slow sales.
United Technologies’ shares have dropped over 4% thus far this year. The stock fell over 6% following the news of the split on Tuesday. As of 2:50 pm ET, the stock was down 5%.