United Technologies Corp (UTC) has completed its acquisition of Rockwell Collins, one of the largest acquisitions in aerospace history, and will separate its commercial businesses into independent entities. The acquisition thus brings together Rockwell Collins and UTC Aerospace Systems to create Collins Aerospace Systems, with a global presence of 70,000 employees in 300 sites and US$23 billion in annual sales on a 2017 pro forma basis.

“Collins Aerospace brings together two great companies with unmatched expertise in developing electrical, mechanical and software solutions,” says chairman and chief executive officer Gregory Hayes. “We will have a laser focus on developing innovative solutions for customers and generating strong returns for shareowners.”

UTC expects the deal to be accretive to adjusted earnings per share in 2019 and to generate more than $500 million in run-rate pre-tax cost synergies by year four. It has updated its 2018 outlook to include the acquisition of Rockwell Collins and now anticipates sales of $64.5 to $65 billion, up from $64 to $64.5 billion; adjusted EPS dilution of approximately $0.10 from the acquisition, resulting in adjusted EPS of $7.10 to $7.20, down from $7.20 to $7.30; and free cash flow of $4.25 to $4.5 billion, down from $4.5 to $5.0 billion. All outlook changes are related to the acquisition of Rockwell Collins.

There is no change in the company's previously provided 2018 expectations for organic sales growth of approximately six per cent.

For 2019, UTC anticipates the acquisition to be $0.15 to $0.20 accretive to adjusted EPS, including the estimated impact of approximately $650 million of incremental intangible amortisation associated with the transaction. UTC also expects $500 to $750 million of accretion to free cash flow in 2019 from Rockwell Collins. The weighted average diluted shares outstanding for 2019 is expected to be approximately 872 million shares.

Collins Aerospace supplies electrical, mechanical and software solutions across all major segments of the aerospace industry and serves commercial and military customers. Pratt & Whitney is a manufacturer in the aircraft propulsion sector with a growing number of engine programmes including the geared turbofan commercial engine and the F135 military engine for the F-35 Joint Strike Fighter development and acquisition programme.