United Technologies Corporation (UTC), Farmington, Conn., announced this week its intention to separate its three brands  – UTC, an aerospace systems supplier industry; Otis, a manufacturer of elevators, escalators and moving walkways; and Carrier, a manufacturer of HVAC&R equipment and leading provider of CO2 systems – into separate companies. 

Carrier, with over 10,000 CO2 subcritical and transcritical rack installations in mostly large supermarkets in Europe, will now concentrate on developing a merger and acquisitions (M&A) portfolio, observers say.

“I think M&A is going to be part of the growth strategy of both Carrier and Otis,” explained Gregory Hayes, Chairman and CEO of UTC, during an investor call yesterday. He also noted Carrier’s strength in Europe in commercial refrigeration.

Carrier is known for its investment in other innovative CO2 technologies such as the Carrier Transicold NaturaLINE CO2-based refrigeration system for shipping containers, with over 2,000 units in the market. 

Carrier has previously acquired natural refrigerant companies, such as Green & Cool, a supplier of CO2 transcritical refrigeration systems, acquired by UTC in 2010 and now part of Carrier.

Any M&A’s carried out by Carrier and Otis in the future will not be big, according to the Financial Times. The newspaper quoted Hayes as saying, last month, “When you have market-leading positions like we do [..in our three brands..] it’s hard to think about big, big transactions that would pass antitrust scrutiny today.” 

On the other hand, the newspaper quoted Morgan Stanley executive director Joshua Pokrzywinski as suggesting HVAC&R firms like Johnson Controls or Lennox International might want to join with Carrier in the future. Both Johnson Controls and Lennox are known for offering natural refrigerant solutions throughout the world.

Why break up UTC?

The break-up of UTC is in direct response to the company’s completion of its Rockwell Collins acquisition, a large aerospace systems supplier. UTC and Rockwell have combined sales of $39 billion in 2017. 

“As stand-alone companies, United Technologies, Otis and Carrier will be ready to solve our customers’ biggest challenges, provide rewarding career opportunities, and contribute positively to communities around the world,” Hayes added in a statement.

The separation of the three companies will be completed by 2020 and will not affect shareholders said UTC.

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