United Technologies reiterated last week that it expects to spend $1.5 billion on acquisitions this year. Chubb has a market value of $1.07 billion.
The purchase would let United Technologies sell Chubb's electronic-security and fire-detection services to Carrier and Otis's commercial customers, delivering more non-aerospace income as the commercial aerospace industry slumps. The company also makes Pratt & Whitney jet engines and Sikorsky helicopters.
"United Technologies has been looking to diversify its business so they don't have as much exposure to aerospace," said Mark Demos, an analyst with Fifth Third Investment Advisors in Cincinnati, which has about 854,000 United Technologies shares among its $34 billion in assets. Aerospace "can be a fairly cyclical boom-bust type of industry,' he said.
Talks are in the initial stages and may fail to produce an agreement, one of the people familiar with the discussions said.
Acquisitions made this year will be "close to' United Technologies main businesses, Chief Financial Officer Stephen Page said on a conference call with analysts last week.
If an acquisition "is not directly core, which means Otis does an elevator company acquisition - it is going to be so close to the core you're going to understand it to be part of what we do best," Page said. "We are not going to be in the toothpaste business."
London-based Chubb didn't respond to a message left yesterday.
United Technologies spokesman Peter Murphy declined to comment.
United Technologies wants to broaden its business to reduce reliance on an aviation market hurt by a weakening US economy, the September 11 attacks and war in Iraq. Pratt & Whitney is the world's second-biggest jet engine maker; Carrier is the world's biggest air-conditioner maker and Otis is the world's biggest elevator and escalator maker.
Commercial aerospace sales fell 20% in the first quarter, the company said.