A major aeronautics and defense corporation is exiting the wind power business, a little over two years after it bought its way in.
United Technologies Corporation (NYSE: UTX) said Thursday it is selling “non-core” businesses to raise cash for a $16.5 bn acquisition of Goodrich Corporation (NYSE: GR).
UTC businesses identified for sale include Clipper Windpower, Pratt & Whitney Rocketdyne, and the Hamilton Sundstrand Industrial businesses: Milton Roy, Sullair and Sundyne. The company expects to realize $3 bn from the divestitures.
“We are taking the opportunity to re-evaluate our portfolio as we enter a transformational stage with the proposed acquisitions of Goodrich and Rolls-Royce’s share in the International Aero Engines joint venture,” said UTC Chairman & Chief Executive Officer Louis Chênevert. “The proceeds from divestitures of non-core businesses will help minimize the equity issuance and reduce dilution from the Goodrich transaction.”
Clipper’s contribution may not be very large, with waning federal support for the wind industry. Without an extension of the federal production tax credit (PTC) wind turbine installations are expected to plummet in 2013, leaving the industry with idle plants. The U.S. Senate last week declined to extend the credit beyond 2012.
Turbine manufacturers have threatened mass layoffs if the PTC is allowed to expire at year’s end. Vestas Wind Systems (NASDAQ: VWS) said 1,600 jobs at four plants in Colorado are at risk. Another manufacturer, Mitsubishi Heavy Industries (OTC: MHVYF), said it will scuttle its $100 million turbine plant slated for Arkansas without the tax credit in place.
Clipper, based in Carpentaria, California, went public in 2005 and opened a 330,000 square-foot manufacturing plant in Cedar Rapids, Iowa, that year.
The company failed to gain a major foothold in the U.S. wind business. UTC acquired one-half of Clipper in early 2010 for $270 mn, with an option to purchase the remaining shares. It did so in late 2010.
In the conference call with investment analysts in February 2010, UTC Chief Financial Officer Greg Hayes said the acquisition was a “small bet” for the Hartford, Connecticut conglomerate. As Clipper’s stock price fell in 2010, UTC acquired the second half of the wind turbine maker for about $112 million.
Clipper’s signature product is the 2.5 MW Liberty wind turbine.