UTX United Technologies Corporation

By David Benoit and Thomas Gryta 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 1, 2018).

William Ackman's Pershing Square Capital Management LP has taken a stake in United Technologies Corp., putting another activist into a large conglomerate that is rethinking its structure.

Mr. Ackman, one of the best-known activist investors, joins other agitators in the industrial sector, including Trian Fund Management LP in General Electric Co. and Third Point LLC in Honeywell International Inc.

The investor hasn't decided on whether to be active in the investment, according to a person close to the matter, but considers United Technologies to be a good company. The size and timing of the stake weren't immediately known.

Analysts and investors have long speculated whether an activist was involved with United Technologies, a company that could be a prime target because of its distinct brands under a common corporate umbrella.

The Farmington, Conn.-based company owns one of the world's biggest jet-engine makers, Pratt & Whitney, along with Otis elevators and Carrier air conditioners.

Upon agreeing to buy Rockwell Collins Inc. for $23 billion in September, United Technologies was open to reviewing a breakup in the coming years after paring its debt and squeezing out cost savings, according to people familiar with the matter.

Last week, United Technologies Chief Executive Greg Hayes reiterated that idea and said that changes in U.S. tax law make such a breakup possible sooner than before. Mr. Hayes said a decision was likely by year-end.

"The question that we all have to ask is, 'is UTC a more valuable property together?' " Mr. Hayes said at an investor conference on Feb. 21. "That's a question we continue to study."

Mr. Hayes also highlighted the higher cost of being separate companies while it already has low costs compared with rivals.

"I like to think, none of the businesses today are capital-constrained because they're part of UTC," he said. Rival GE is currently struggling and considering its own breakup as lagging cash flow and mistimed spending have forced it to slash its dividend and financial targets.

Pershing Square is facing its own challenges after losing $4 billion on a bet on drugmaker Valeant Pharmaceuticals International Inc. The fund hasn't made money in any of the last three years, and, even after stabilizing losses last year, it remains well below its highs, putting pressure on Mr. Ackman to find big stock winners in 2018.

The news of the United Technologies investment was earlier reported by CNBC.

Shares of the company rose $2.39, or 1.8%, to $135.32 in Wednesday afternoon trading. The share price has risen 21% in the past year, outperforming the S&P 500.

Write to David Benoit at david.benoit@wsj.com and Thomas Gryta at thomas.gryta@wsj.com

(END) Dow Jones Newswires

March 01, 2018 02:47 ET (07:47 GMT)

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