Consolidation among top-tier suppliers to Boeing and Airbus has taken a big step forward with the announcement on 4^th September that United Technologies Corp. (UTC) and Rockwell Collins have reached a definitive agreement under which United Technologies will acquire Rockwell Collins for $140.00 per share, in cash and UTC stock.

The move comes less than a year after Rockwell Collins, best known for its avionics and eletronics products, acquired B/E Aerospace, a specialist in cabin interiors, for approximately $6.4bn in cash and stock, plus the assumption of $1.9bn in net debt. That deal was seen by some observers as a sign that the commercial aircraft order cycle has passed its peak, raising the pressure on suppliers to reduce costs.

UTC acquired Goodrich for $18bn in 2012 and tried, unsuccessfully, to make a deal with Honeywell International last year. It sold Sikorsky to Lockheed Martin for $9bn in 2015.

A similar consolidation movement is under way in Europe. In January 2017, Safran unveiled a €8.5bn bid for seating and cabin interior specialist Zodiac Aerospace.

The UTC/Rockwell transaction is projected to close by the third quarter of 2018, subject to approval by Rockwell Collins' shareowners, as well as other customary closing conditions, including the receipt of required regulatory approvals.

The purchase price implies a total equity value of $23bn and a total transaction value of $30bn, including Rockwell Collins' net debt.

On a pro-forma 2017 basis, UTC is expected to have global sales of approximately $67 to $68bn following the transaction, based on estimated results. Rockwell Collins’ estimated sales are greater than $8bn.

Upon completion of the transaction, Rockwell Collins and UTC Aerospace Systems will be integrated to create a new business unit named Collins Aerospace Systems. Kelly Ortberg will assume the role of Chief Executive Officer with Dave Gitlin serving as President and Chief Operating Officer.