In an unusually strong statement, Boeing warned that if it decides that the $23 billion acquisition damages its interests, it may renegotiate existing contracts with the two suppliers or ask regulators to block the deal.

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If United Technologies closes the deal reached Monday to buy Rockwell Collins for about $23 billion, it will become a giant in aerospace systems — a prospect that worries Boeing.

“We intend to take a hard look at the proposed combination of United Technologies and Rockwell Collins,” Boeing said in a statement Tuesday. “Until we receive more details, we are skeptical that it would be in the best interest of — or add value to — our customers and industry.”

In an unusually strong declaration, Boeing went on to threaten that if it decides that the deal damages its interests, it may renegotiate existing contracts with the two suppliers or ask regulators to block the deal.

“We would intend to exercise our contractual rights and pursue the appropriate regulatory options to protect our interests,” the company statement said.

Boeing’s “interests” in this case consist of keeping competition among suppliers and lowering prices for its aircraft systems.

And with a renewed ambition to greatly expand its role in the lucrative market for after-sales service, Boeing also wants to ensure the avionics segment of that market in particular isn’t locked up by the combination of United Technologies and Rockwell.

Along with its European rival Airbus, Boeing in recent years has moved aggressively to leverage its position as a giant of the industry to squeeze its suppliers for ever lower costs.

That pressure on the aerospace supply chain has tightened as the two major plane makers have accelerated their head-to-head competition by rapidly increasing production rates of their single-aisle jets and demanding deeper discounts on parts for the higher volume of sales.

While Boeing euphemistically dubs its push to cut supplier costs “Partnering for Success,” analyst Rob Stallard of Vertical Research recently noted that suppliers privately call it “Partnering for Less.”

The proposed merger, one of the biggest in aviation history, creates an aircraft-parts giant better positioned to withstand the squeeze.

The company will boast a broad suite of products for airplanes, from Rockwell Collins’s touch-screen cockpit displays to United Technologies’s Pratt & Whitney jet engines.

“The combination gives us the ability to both scale and innovate,” Greg Hayes, chief executive officer of United Technologies, told analysts on a conference call Tuesday, a day after the deal was announced.

He insisted the merger would be “good for our customers,” saying that the combined company could better develop innovative digital aircraft systems that are “more electric, more intelligent, more integrated, more connected and more cost-effective.”

Hayes attempted to head off criticism that the merger would harm competition by saying the two companies make mostly different airplane systems with minimal overlap.

“You’re not seeing consolidation in individual systems,” Hayes said. “We’ll be able to offer a huge suite of systems across the airframe, but this is not like we’re eliminating any competition anywhere across the business.”

Rockwell supplies Boeing mainly with avionics systems for aircraft flight decks, including pilot displays, flight controls, and communications and navigation equipment.

And earlier this year it also became a big supplier of airline cabin interiors after its acquisition of B/E Aerospace in April.

Rockwell is the main supplier of avionics systems on both the Boeing 787 Dreamliner and the forthcoming 777X jet.

The aerospace unit of United Technologies (UTC) manufactures major aircraft systems including landing gear, Pratt & Whitney engines, and electrical power systems.

UTC supplies many systems for the 787 Dreamliner, including its innovative electrical power system and its electric braking.

It will provide multiple systems on the 777X, including electrical power generation and cabin air conditioning.

“This is a significant deal for UTC and the aviation industry in general,” Hans Weber, president of San Diego-based consultancy Tecop International, said in an email. “UTC becomes a critically important supplier to Boeing and will have a strong negotiating position as Boeing is putting price pressure on suppliers.”

Manufacturer pressure

In addition to squeezing suppliers on costs, Boeing is also treading onto their turf with new businesses dedicated to spare parts and services, as well as avionics.

Boeing this year formed a separate unit, Boeing Global Services, with the aim of growing its revenue from aftermarket sales to $50 billion from $15 billion within 10 years.

Rockwell Collins has a customer base that spans the world’s largest airlines, airports and private-jet operators. Those clients, combined with the company’s catalog of avionics and aircraft-cabin equipment, could help insulate the merged company from Boeing’s expansion into aftermarket sales and services, Douglas Rothacker and Joel Levington of Bloomberg Intelligence said in a report before the deal was finalized.

Airbus, too, is uneasy about the UTC/Rockwell merger.

The European plane maker issued a veiled warning to United Technologies to not let empire building get in the way of critical deliveries for the French plane maker.

“Our total focus is on delivering planes, and we hope that this M&A would not distract UTC from their top operational priority,” Airbus said by email.

That Airbus priority is for UTC to start delivering on time — and at higher rates — the geared turbofan engines it needs for its new A320neo single-aisle aircraft.

The engines have been dogged by technical glitches that have weighed on deliveries of Airbus’s best-selling model.

Market reaction

Rockwell Collins shareholders will receive $140 a share in cash and stock, the companies said in a statement Monday after weeks of behind-the-scenes negotiations. The price represents an 18 percent premium to Rockwell Collins’s closing level on Aug. 4, before Bloomberg News reported on the talks.

United Technologies said it plans to finance the cash portion of the deal with about $14 billion of new debt. Moody’s Investors Service placed the company’s ratings on review for downgrade, saying United Technologies may have to increase its “reliance on inherently uncertain earnings growth to moderate leverage.”

With the acquisition, valued at $30 billion including the assumption of debt, United Technologies is increasing its bet on commercial-aircraft systems. The market accounts for about half of sales at the Farmington, Connecticut-based manufacturer, with the rest coming from elevators, air conditioners and other building systems.

United Technologies plans to combine its aerospace business with Rockwell Collins in a new unit named Collins Aerospace Systems. Rockwell Collins CEO Kelly Ortberg will head the division, while Dave Gitlin, who currently runs UTC Aerospace Systems, will serve as president and chief operating officer.

The buyer expects the acquisition to add to adjusted earnings after the first year following closing, and generate $500 million or more in annual pretax savings and other benefits by the fourth year. The deal is expected to close by next year’s third quarter, subject to regulatory and shareholder approval, and other customary conditions.

United Technologies opted for a mix of cash and stock with the goal of maintaining a strong credit rating, the company said. Chief Financial Officer Akhil Johri said United Technologies would suspend its share repurchase plans for the next few years.

Industry deal making

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Rockwell Collins, based in Cedar Rapids, Iowa, is already absorbing the largest acquisition in its history. The company earlier this year closed the purchase of B/E Aerospace, adding deluxe jetliner seats, lavatories and galley equipment to a lineup of high-technology avionics products. That deal was valued at $8.6 billion including the assumption of debt.

Consolidation is necessary for the aerospace-parts manufacturers, said Shukor Yusof, founder of aviation consultation Endau Analytics. Given that the industry remains fragmented, the deal isn’t likely to encounter regulatory hurdles, he said.

When Hayes took the United Technologies helm in 2014, he pledged to consider major moves, including deals potentially in excess of $20 billion. The company sold its Sikorsky helicopter business to Lockheed Martin for $9 billion in 2015.

Hayes rejected a merger proposal in early 2016 from Honeywell, saying he didn’t believe antitrust regulators would have approved the $90 billion tie-up. Honeywell later abandoned the bid.

The Rockwell Collins transaction tops United Technologies’ own $18 billion purchase of Goodrich in 2012. Billionaire Warren Buffett’s Berkshire Hathaway last year completed the acquisition of Precision Castparts, a metals fabricator that produces parts for aerospace suppliers, for $37 billion including debt.

Storied companies

The United Technologies-Rockwell Collins deal would combine two storied companies with roots in the early days of the U.S. aviation industry.

Arthur Collins founded the eponymous shortwave radio company in 1933. Collins Radio made its mark serving a South Pole expedition by Rear Adm. Richard Byrd, also expanding into airplane communications and eventually into space as a supplier to the Mercury, Gemini and Apollo missions.

The acquirer is a descendant of the United Aircraft and Transport Corp., a conglomerate formed by Boeing founder William Boeing and Pratt & Whitney’s Frederick Rentschler. Trust busters in 1934 broke up the company, which included Boeing, Pratt and United Airlines.

Few hurdles

Hayes said he doesn’t see any insurmountable hurdles to closing the deal. Concessions are often required where regulators spot overlaps between companies that might allow them to squeeze rivals or customers.

United Technologies won European Union approval to buy Goodrich only after an extended 2012 probe into antitrust concerns. The companies allayed regulatory worries by selling Goodrich units for electrical power generation and small-engine controls and giving Rolls-Royce Holdings the option to buy a Goodrich fuel nozzle research project.

United Technologies and Rockwell Collins have little overlap in products, analysts said.

“Although we expect scrutiny from regulators we fully expect this deal to close,” Jeff Sprague, an analyst with Vertical Research Partners, said in a note.