CALIFORNIA, USA: United Technologies Corp has reached a $16.5 billion cash deal to acquire aircraft components maker Goodrich Corp, in what would be the diversified U.S. manufacturer's biggest deal in a decade.

United Tech said on Wednesday it would pay $127.50 a share for Goodrich, a 47 percent premium over the stock's closing price last Thursday. It also includes $1.9 billion in assumed debt.

The deal comes as blue-chip United Tech looks to cash in on the upswing in plane orders and production as declining global spending on defense pressures its military business.

The acquisition can help it build critical mass in new aircraft technology and plane services as civil demand rebounds.

Goodrich is poised to grow as key commercial plane programs such as the Boeing 787 Dreamliner and upcoming Airbus A320neo ramp up production.

"It's a good deal," said Virginia-based defense consultant Jim McAleese.

"This is definitely a step forward in the growth of United Technologies in commercial aerospace, and it reduces the company's exposure to defense," he said.

BUCKS M&A SLOWDOWN

The deal comes despite a broad slowdown in merger activity globally, as market volatility and economic uncertainty give many firms a pause.

But it shows large, well-capitalized companies are still willing to take on strategic transactions and financing remains available for companies with good credit.

Within the sector, the deal could also be a harbinger of more M&A as companies look to reduce their dependence on defense amid declining global spending.

Goodrich supplies parts for Hartford, Connecticut-based United Tech's Pratt & Whitney jet engines and Hamilton Sundstrand's aircraft electronics.

The deal is a big move for United Tech Chief Executive Louis Chenevert, who had long said he was interested in doing more deals but was having a hard time coming to terms with targets on price.

"Goodrich delivers on all of our acquisition criteria. It is strategic to our core, has great technology and people, and strengthens our position in growth markets," said Chenevert, who ran the Pratt & Whitney unit before taking on the top job.

The deal is United Tech's largest since its year 2000 showdown with General Electric Co over Honeywell International Inc. United Tech made a $36 billion offer for Honeywell, which GE topped. European regulators ultimately scuttled that deal.

Goodrich CEO Marshall Larsen, a 34-year Goodrich veteran, will run the new UTC Aerospace Systems unit, which will be based in Goodrich's current home town of Charlotte, North Carolina.

United Tech plans to sell $4.2 billion in stock and suspend share repurchases through next year to maintain its credit rating, according to the Wall Street Journal, which said JPMorgan Chase is leading a $15 billion loan package for the deal, with HSBC Holdings and Bank of America Corp also involved in the financing.

United Tech shares have risen some 8 percent over the past year, outpacing the 6 percent rise of the Dow Jones industrial average finance market. Goodrich is up 52 percent, with more than half of that run coming over the past week.

JPMorgan Chase & Co and Goldman Sachs & Co advised United Tech on the deal, while Credit Suisse and Citigroup advised Goodrich.