The decision by United Technologies Corp. to break up the company presents an early challenge for Governor-elect Ned Lamont.
The conglomerate announced late Monday that it would be selling its Otis and Carrier divisions. It will maintain its aerospace companies, including Pratt & Whitney, and Rockwell Collins, its newest acquisition.
UTC is one of Connecticut’s largest employers, and with that in mind Lamont’s administration will feel pressure to make sure all three divisions, especially its aerospace business, remains headquartered in Connecticut.
“I talked to Mr. Hayes a week ago. I’ll be talking to him again later today,” Lamont said Tuesday, referring to UTC Chairman and CEO Gregory Hayes.
“Look we’re going to follow this like a hawk,” Lamont said. “We’re not going to be taken by surprise.”
Gov. Dannel P. Malloy’s administration was criticized for not being able to convince General Electric, another iconic company, to keep its headquarters in Fairfield. However, since GE moved to Boston its stock has been downgraded and booted from the Dow Jones Industrial average. Its decision to leave Connecticut was dissected during the recent election cycle and Lamont and his Republican opponent, Bob Stefanowski, disagreed over the reasons GE left.
There’s no indication that UTC has any immediate plans to relocate its operations.
Lamont said the question becomes what pieces stay in Connecticut, and “how do we help them grow and expand in the state?”
He said there’s “a lot of incentive to staying here and I’m going to make sure they stay here.”
Hayes described UTC’s announcement as “a pivotal moment” in the company’s history that “will best position each independent company to drive sustained growth.” He added that he’s confident that each company will continue to perform and innovate.
Lamont said he wants Otis, Carrier, and UTC to stay in Connecticut.
“I’m going to make darn sure that they know they have a governor whose door is open. We’ll do everything we can to make sure this is a place they can call home,” Lamont said.
Lamont said the breakup of the conglomerate came a little sooner than expected, but it wasn’t unexpected.
A New York-based hedge fund headed by billionaire investor Daniel Loeb urged UTC back in May to break up into three businesses.
Reuters reported in May that Third Point — Loeb’s hedge fund — sent a letter to clients stating: “A three‐way split would unlock in excess of $20 billion of value, net of separation costs.”
In March, Hayes estimated it would cost as much as $3 billion to split the companies and it would take two years to complete. In a press release Monday he said they expect the separation of the three divisions to be completed by 2020.
It’s uncertain whether Otis or Carrier will stay headquartered in Connecticut, but UTC has some incentive to stay.
In 2014, the General Assembly approved a deal that gave UTC access to $400 million in unused tax credits to expand facilities and cut their tax liability.
That deal did not include Otis or Carrier, but it did commit Pratt & Whitney to the state for 15 years.
Through June 2017, UTC has earned a total of $245 million of the $400 million in authorized credits for exchange. Two years remain for them to earn the balance, according to a Department of Economic and Community Development report.