United Technologies Maybe Chasing Rockwell Collins

United Technologies is possibly offering to acquire Rockwell Collins for $140/share, a price that reflects 137.0% Fair Value (Fv). Rockwell Collins is currently trading at 128.2% Fv. We are doubtful this acquisition will produce favorable financial results long term for the company. We believe they may be chasing the higher margins from Rockwell Collins in hopes it will benefit their income statement very quickly. Longer term they may be surprised as to how difficult it will be to retain Rockwell Collins creative talent in a larger United Rockwell.