Loeb Joins Ackman in United Technologies as CEO Weighs Breakup

(Bloomberg) -- United Technologies Corp. is becoming a magnet for activist investors.

The maker of jet engines and elevators is the latest target for Dan Loeb’s Third Point, a hedge fund that has called for dramatic changes at other industrial companies. Bill Ackman’s Pershing Square has also taken a position in United Technologies, Bloomberg News reported last month.

The presence of activist firms raises the stakes as the Farmington, Connecticut-based company weighs a breakup and looks to close one of the largest-ever aerospace deals. Chief Executive Officer Greg Hayes has said United Technologies will decide by year-end whether it would be more valuable as three stand-alone businesses.

Hayes said recently that the stock was undervalued and that he was aware of rumors that United Technologies had been a target of activists. While the decision to consider a split wasn’t driven by outside investors, he said he’s open to ideas to boost the share price.

“There’s certainly value to be unlocked,” he said in a March 16 interview. “If an activist wants to come into the stock and they’ve got some ideas, we’ll listen.”

United Technologies declined to comment Monday.

Shares Jump

The manufacturer’s shares rose 2.6 percent to $125.49 at 12:33 p.m. in New York after advancing as much as 3.6 percent, the biggest intraday gain in more than a month. United Technologies fell 4.1 percent this year through March 23, in line with the decline in a Standard & Poor’s index of industrial companies.

Third Point’s involvement was disclosed in a filing dated March 23 with the U.S. Federal Trade Commission. The form is required when an investor buys shares in a company above a certain threshold and seeks to hold talks with that company about things such as strategy, management or board changes.

While Third Point has taken a stake in United Technologies, according to a person familiar with matter who asked not to be identified, the firm hasn’t revealed the size of its holding or said whether it would seek any changes.

The fund already is involved with one of United Technologies’ key rivals, Honeywell International Inc., having revealed a stake last year and called for significant portfolio changes. Honeywell CEO Darius Adamczyk has since decided to spin off the home-products and transportation-systems business units.

Blockbuster Deal

United Technologies has said it will consider all options to boost shareholder value, including a plan that would create stand-alone aerospace, elevator and climate-controls businesses.

Any breakup wouldn’t come until after United Technologies wraps up its $23 billion acquisition of Rockwell Collins Inc., Hayes said. The deal, set to close later this year, will reshape United Technologies’ aerospace operations while the Pratt & Whitney unit boosts production on a critical new jet engine.

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