United Tech Rejects Honeywell's Offer

(RTTNews) - United Technologies Corp. (UTX) rejected Honeywell International Inc.'s (HON) purchase offer, saying it would be irresponsible for UTC to move forward with the proposed combination .

Honeywell's bid grossly undervalues United Technologies, its chief executive officer Gregory Hayes said in a letter filed Friday with the U.S. Securities and Exchange Commission.

United Tech's filing came after Honeywell unveiled the details of its proposal, which it first made privately last week, valued United Technologies at about $108 a share, including $42.63 in cash and 0.614 of a Honeywell share. Honeywell specified that the proposed combination would lead to cost savings of $3.5 billion in four years and the combined entity would raise $36 billion in debt.

Honeywell also added in the presentation that the transaction is "strongly worth pursuing, and the combination is a compelling, transformational opportunity for both sets of shareholders.

Honeywell said the combined company will have "highly complementary" offerings will lead to product innovaton limited overlap. According to Honeywell, potential regulatory issues would be "easily resolved. According to Honeywell, potential regulatory issues would be "easily resolved."

United Technologies Hayes repeatedly pointed to regulatory risk, saying the merger wouldn't get approved due to an environment that "is the most aggressive toward megadeals in decades." Even if a deal were approved, the regulatory delay, required divestitures, and customer concerns and concessions would ultimately destroy shareholder value far beyond any synergies.

Honeywell shares closed 1.1 percent lower at $103.03, while United Technologies slipped $0.38 to $97.69.