United Technologies Halts Chubb Unit Sale as Bids Said Too Low

(Bloomberg) -- United Technologies Corp. halted the sale of its Chubb fire-safety and security business as the industrial giant turns its attention to a broader plan to break apart.

The company opted not to sell the unit now “due to the recent market volatility,” according to a statement Thursday in response to queries from Bloomberg News. United Technologies hadn’t previously detailed its sale plans for the business.

The effort stalled after bids from prospective buyers -- including private equity firms Apax Partners, PAI Partners and Eurazeo SE -- came in below expectations, people familiar with the matter said, asking not to be identified because the process is private. United Technologies was seeking about $3 billion for the asset, a person familiar with the matter said previously.

Representatives for PAI, Eurazeo and Apax declined to comment.

The scuttled talks crimp an effort by United Technologies to streamline its portfolio as it focuses on a corporate breakup. The manufacturer is planning to separate its disparate businesses, which span from jet engines to elevators to air conditioners, following the recent $23 billion acquisition of Rockwell Collins Inc., a maker of cockpit displays and other aircraft parts.

Activist Pressure

Chief Executive Officer Greg Hayes announced the breakup plan in November amid pressure from a pair of activist shareholders, Dan Loeb’s Third Point and Bill Ackman’s Pershing Square Capital Management. Hayes is under pressure to boost shareholder value after the shares fell 17 percent last year, trailing the broader market.

United Technologies climbed less than 1 percent to $109.58 at 12:08 p.m. in New York.

The Farmington, Connecticut-based company acquired Chubb in 2003 for $1 billion to help broaden its focus beyond aviation. But the unit has underperformed in the Climate Controls & Security portfolio, which also includes brands such as Carrier and Kidde.

Chubb, which makes products such as burglar alarms and fire extinguishers, accounts for about $2.5 billion in sales -- just under half of the United Technologies fire and security business -- and has margins of about 10 percent, according to a report this month from RBC Capital Markets.

United Technologies has taken steps to narrow the focus in the climate-controls segment, including selling an ice-cream machine unit, Taylor Co., for $1 billion last year.

--With assistance from Sarah Husband and Tony Robinson.

To contact the reporters on this story: Sarah Syed in London at ssyed35@bloomberg.net;Dinesh Nair in London at dnair5@bloomberg.net;Richard Clough in New York at rclough9@bloomberg.net

To contact the editors responsible for this story: Dinesh Nair at dnair5@bloomberg.net, Amy Thomson, Brendan Case

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