What's going on?

Honeywell and United Technologies (UTX) are two of the world�s biggest makers of aircraft parts (like engines and cockpits) as well as other things like air conditioning units. On Monday, CNBC reported that Honeywell and UTX have discussed merging � although no deal has been agreed.

What does this mean?

The deal would likely make strategic sense for the two companies: since they operate in the same industries (especially aircraft parts and the climate control business), the opportunities forsynergies are considerable. That means that they could do things like cross-sell aircraft parts to customers like Boeing and Airbus as well as, probably, decrease the costs of manufacturing such parts.

But for exactly the same reasons, the deal might be opposed by anti-trust regulators in both the US and the EU who are tasked with ensuring that no one company has too much power in a specific industry. UTX has, reportedly, told Honeywell that it doesn�t want to pursue a merger because, they feel, it�s unlikely to be approved.

Why should I care?

For the stock: UTX stock jumped 5% on the news. The fact that Honeywell, reportedly, is prepared to offer UTX shareholders a �premium� (i.e. pay a higher price than its trading price) was good news for that stock. Honeywell can afford to do this partly because its stock has done significantly better than UTX�s stock in the past year.

The bigger picture: This would be a huge deal. Honeywell and UTX might not be household names, but they are each worth more than $70 billion. If consummated, this would be a massive deal.