DAVID HAFFENREFFER, CNN ANCHOR: Well, two manufacturing giants have confirmed that they are in merger talks. United Technologies is in discussions to acquire Honeywell in a deal that sources say is worth about $40 billion. Now shares of Honeywell surged almost 20 percent in after-hours trading following that news. Under the deal, its stockholders would reportedly receive a 37-percent premium for each of their shares, however, shares of United Technologies fell as much as 10 percent after hours. Our Bill Dorman has more.</s>BILL DORMAN, CNN CORRESPONDENT (voice-over): A deal linking United Technologies and Honeywell International would combine two of the 30 companies making up the Dow Jones industrial average. Late Thursday, the two companies released a statement saying only that they, quote: "... confirmed that they are in discussions regarding a possible business combination." Adding that they would have no further comment at this time. Both companies are in what analysts call the multi-industry space, a fancy term for conglomerates, and both do major contract work for the Defense Department. United Technologies makes everything from Otis elevators to Pratt & Whitney aircraft engines. Honeywell produces everything from specialty chemicals to heating and cooling system controls. Some 40 percent of Honeywell's sales come from the aerospace sector. Just last year, Honeywell merged with Allied Signal, and the companies have had some difficulties combining their business operations. Analysts, such as James Samuels at Banc of America Securities say a deal with the larger United Technologies may actually help speed positive changes.</s>JAMES SAMUELS, BANC OF AMERICA SECURITIES: There really hasn't been any resolution as to who was actually in charge, and so if you bring in an outside party, I think those decisions get resolved faster than they otherwise might have been resolved.</s>DORMAN: Federal regulators would still have to approve the combination and the boards of both companies may agree to a deal by this weekend. Bill Dorman, CNN Financial News, New York.
United Technologies in Mergers Talks to Acquire Honeywell