By Soyoung Kim, Paritosh Bansal and Philipp Halstrick
(Reuters) - United Technologies Corp
General Electric Co
People familiar with the discussion between United Technologies and Goodrich declined to elaborate on the likely price and cautioned the talks could still fall apart.
JPMorgan Chase & Co
An acquisition of Goodrich, which has a market capitalization of about $14 billion, would be the biggest deal in a decade for United Technologies, which makes Pratt & Whitney aircraft engines, Otis elevators and Carrier heating and air conditioning systems.
Charlotte, North Carolina-based Goodrich's aircraft products include landing gear and wheels and brakes, fuel pumping systems, seating and nacelles, the enclosed structure in which the engine is housed or cargo is carried.
Adding Goodrich would help United Technologies build critical mass in aerospace as rising demand for fuel-saving aircraft spurs airline orders.
At the same time, new aircraft programs such as the Boeing Co
Goodrich could also provide a buffer for United Technologies as some of its units face headwinds because of a declining defense spending outlook.
Reuters first reported on Friday that United Tech was lining up financing of $10 billion to $20 billion for a takeover of a U.S. company.
Goodrich would be a "game changer for the company and a catalyst for additional M&A," said Philip Finnegan, director of corporate analysis for the Teal Group, an aerospace consultancy in Fairfax, Virginia.
"This will put pressure on competitors of United Technologies to make their own deals, to broaden their own abilities, to create more integrated systems," he added.
Industry executives said there would be some overlap in the areas of service and maintenance, making nacelles and landing gear, but said they did not expect significant opposition from defense officials.
While a full review of any anti-trust issues only kicks in after a deal is formally announced, no major concerns have been flagged, according to one of the people familiar with the negotiations.
Goodrich shares closed 3.9 percent higher at $111.82 on the New York Stock Exchange, while United Tech rose 0.6 percent to $76.01.
Representatives of United Technologies, Goodrich, Honeywell and GE declined to comment. JPMorgan, Citi and Credit Suisse also declined to comment.
(Reporting by Soyoung Kim and Paritosh Bansal in New York and Philipp Halstrick in Frankfurt; additional reporting by Scott Malone in Crotonville, New York, and Andrea Shalal-Esa in Washington; editing by Andre Grenon and Ted Kerr)