UTC sells pump units, wins regulatory approval on Goodrich

United Technologies Corp. said late Wednesday, July 25, it would sell its industrial pumps units to BC Partners Ltd. and Carlyle Group for $3.46 billion. The sale delivers a key component in the company's plan to finance its $16.5 billion acquisition of Goodrich Corp., which U.S. and European regulators on Thursday approved with several conditions.

Hartford, Conn.-based UTC in March pledged to raise at least $3 billion via asset sales to pay for Goodrich, part of a sweeping portfolio reshuffle prioritizing areas of expected high growth over slower segments. The company earlier this week announced the sale of its Rocketdyne business to GenCorp Inc. for $550 million, and also has its smaller Clipper Windpower division on the block.

The regulatory approval to close the Goodrich deal requires UTC to sell Goodrich's electric power systems business and its pumps and engine controls unit, along with a previously announced planned sale of the target's stake in the Aero Engine Controls joint venture to partner Rolls-Royce Holdings plc.

UTC, maker of products including Carrier HVAC systems, Otis elevators, Pratt & Whitney jet engines and Sikorsky helicopters, said that with the approvals now in hand, it intends to close the Goodrich deal by the end of the week.

The assets to be acquired by BC and Carlyle include pumps and compressors that have been housed inside of UTC's Hamilton Sundstrand unit. The businesses include Sundyne, Milton Roy and Sullair, and specialize in products for the energy, chemicals and construction markets.

UTC chairman and chief executive Louis Chenevert said the sale "represents another significant step forward in our ongoing portfolio transformation." The executive said that "while these are strong, profitable companies with solid customers and continued promising outlooks, they are not part of UTC's core of aerospace and building systems."

The seller, according to a deal source, attracted significant interest for the assets, with a number of strategics including SPX Corp. and Flowserve Corp. interested in at least part of the Hamilton Sundstrand business. But UTC, according to reports, preferred to find a single buyer for the entire business to simplify the divestiture process.

With the Goodrich deal in hand, UTC has easily surpassed its target for divestiture proceeds and appears on track to fund the Goodrich deal without a hit to its credit rating.

Carlyle and BC in a statement said they intend to expand its acquired pumps platform, particularly in developing markets. "The company is well positioned in its markets and will benefit from additional investment to fund product development and growth initiatives," Carlyle managing director Brian Bernasek said in a statement.

This is the second large buyout involving BC in recent weeks, following the $6.6 billion purchase of Suddenlink Communications Inc. by BC and Canada Pension Plan Investment Board, announced July 19.

The buyers were advised by Citigroup Inc. and RBC Capital Markets and took legal counsel from Latham & Watkins LLP. External debt financing commitments have been provided by Citi, Credit Suisse Group, Deutsche Bank AG, Morgan Stanley, RBC and UBS. According to sources, UTC worked with Goldman Sachs Group Inc. to shop the assets.