Manufacturing conglomerate United Technologies Corporation will buy back $2.65 billion worth of its stock from two companies: Morgan Stanley & Company and Goldman Sachs & Company. According to the terms of the stock buyback program, the manufacturer of Pratt & Whitney jet engines, Carrier Air Conditioning, and Otis Elevators will pay Morgan Stanley and Goldman Sachs $1.325 billion each to get 9.29 million shares from each bank. This is still within the 60 million shares authorized by shareholders. All told, this deal is part of a $3 billion stock buyback plan approved by the company’s board.
This is a very interesting deal, considering the fact that the company is in transition. United Technologies has been working on cutting its cost footprint. It is also leaving its Hartford, Connecticut headquarters and is widely thought to be seriously planning a potential spin-off of its helicopter business. The company has been through a rough patch lately because of a softening in US military spending as well as lower demand for its products due to the depressed state of the oil field services industry.
The good news is that the company has landed several big-ticket deals recently, including the production of the presidential helicopter in association with Lockheed Martin Corporation. It remains to be seen what the long-term impact of this stock buyback program would be on United Technologies shares. Keep in mind that there is a stock buyback trend going on among large American corporations. Based on the United Technologies news, it appears that this trend shows no signs of slowing down anytime soon.