Zacks_Analysts' Blog : UTX to Acquire Stake in Clipper - Analyst Blog

United Technologies Corp. (UTX) announced that it has agreed to acquire a 49.5% stake in Clipper Windpower Plc (CWP), a California-based wind turbine manufacturer, which trades on the AIM London Stock Exchange.

UTC’s total investment will be £166 million (approximately $270 million) to purchase a combination of 84.3 million newly issued shares and 21.8 million shares from existing shareowners. The investment has been approved by the boards of directors of both UTC and Clipper Windpower, and closing is pending Clipper Windpower shareholder and regulatory approval.

UTC will be able to expand its power generation portfolio and enter the high-growth wind power segment by investing in a company with strong management and innovative technology. The $50 billion-plus segment for wind turbines and installation has grown at an annual rate of 25% during this decade.

UTC expects to work closely with Clipper Windpower to improve the company’s core technology, manufacturing, product quality, and supply management capabilities.

The company’s Chief Executive Officer Louis R. Chênevert reaffirmed the company’s expectation for 2009 earnings per share of $4.10. He also projected 2010 earnings per share of $4.40 to $4.65, growth of 7% to 13%. Revenues for 2010 are expected to be $54 billion to $55 billion, up 2% to 4% from prior year on zero to 2% organic growth, with foreign currency translation and the net impact of acquisitions/divestitures (1% each).

We anticipate 2009 cash flow from operations less capital expenditures in excess of net income attributable to common shareowners and 2010 cash flow from operations less capital expenditures to be equal to or in excess of net income attributable to common shareowners.

United Technologies provides technology products and services to the building systems and aerospace industries worldwide. Its Otis segment designs and manufactures escalators, moving walkways, and passenger and freight elevators. United Technologies’ Hamilton Sundstrand segment offers aerospace products, including power generation, management and distribution systems, flight systems, engine control systems, environmental control systems, fire protection and detection systems, auxiliary power units, propeller systems, and industrial products, such as air compressors, metering pumps, and fluid handling equipment. This segment also provides aftermarket services, such as spare parts, overhaul and repair, engineering and technical support, and fleet maintenance programs. Its major competitors are Boeing Co. (BA) and General Electric Co. (GE).

We currently have a Neutral recommendation on UTX.