Activist Fund Has Tough Sell to Get Rockwell to Rethink Deal


Starboard Value is flying close to the sun. Starboard, the activist hedge fund run by Jeff Smith, wants aircraft-parts maker Rockwell Collins to consider ditching a $6.4 billion tie-up with B/E Aerospace. Grounding the merger has merit, but Carl Icahn and others have had mixed results agitating against mergers and acquisitions. A Trump-inspired rally in Rockwell’s stock complicates Starboard’s case.

Rockwell looked more vulnerable back in October. Its shares fell more than 6 percent on Oct. 24, the day after it announced the B/E deal. Breakingviews calculations at the time found that the touted $125 million a year of after-tax cost savings fell just short of covering the $1.3 billion premium it was forking over for its quarry — so even if Rockwell delivered the promised synergies, which could be ambitious, given limited overlap between the two companies, it would have to increase sales at the combined group to deliver value for its shareholders. The transaction would also nearly double the acquirer’s debt load at a time when business and regional jet sales are slowing…

Activist Fund Has Tough Sell to Get Rockwell to Rethink Deal

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