Boeing Ends Objection to United Technologies-Rockwell Merger: The shift by the plane maker, which had said the merger could hurt supply chain competition, comes amid a big backlog of jet deliveries

The Wall Street Journal
By Doug Cameron
March 19, 2018 2:31 p.m. ET

Boeing Co. dropped an opposition to plans for two of its largest suppliers to merge, reflecting pressure on the aerospace industry to deliver its record backlog of jetliners.

Chicago-based Boeing last year criticized plans by United Technologies Corp. to buy Rockwell Collins Inc. for $23 billion and consolidate its position as the world’s largest aerospace supplier by sales.

Boeing said Monday it now backed the combination, while United Technologies and Rockwell Collins said they have also signed up for the plane maker’s cost-cutting program.

“At a time of record industry production, it is critically important that we have business arrangements with all of our suppliers that drive increased focus on meeting their cost, schedule and quality commitments to Boeing and our customers,” the plane maker said.

Boeing executives said last year they may cancel or amend some contracts if the deal went through, arguing that the combination could undermine competition in the aerospace supply chain.

The companies didn’t disclose details of their agreements, though Boeing had previously said it would look to secure some of their synergies. United Technologies expects the deal to close this year, subject to regulatory approvals.

A day after the plan was made public last year, Boeing said it was “skeptical” the transaction would benefit its airline customers. Both Airbus SE and Boeing also privately lobbied two years ago against unsuccessful plans by Honeywell International Inc. to acquire United Technologies, according to people familiar with the situation. But Honeywell’s $15 billion aerospace unit had far more product overlap with United Technologies.

Airbus has recently expressed misgivings about the proposed takeover of aerospace parts maker GKN PLC by U.K.-based turnaround specialist Melrose Industries PLC. Airbus also expressed concern Melrose had short-term financial incentives that aren’t suited to the long-term investment returns of the aerospace industry. Melrose denied the claim and said it invested heavily in research and development.

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