State officials are closely watching reported merger talks between United Technologies Inc. and Rockwell Collins, the largest private employer in Cedar Rapids.

The Wall Street Journal, citing sources close to the talks, reported this week that United Technologies is nearing a deal worth more than $20 billion to acquire the Cedar Rapids aerospace company.

Officials with both companies declined to comment on the report.

If completed, the United-Rockwell Collins transaction would go down as the largest aerospace merger on record and the nation's overall fourth-largest merger or acquisition this year, according to records maintained by financial markets platform Dealogic.

Rockwell Collins employs some 9,000 people in the Cedar Rapids area and 30,000 worldwide, according to the Cedar Rapids Metro Economic Alliance. The avionics technology company, which reached $5.26 billion in sales last year, makes cabin electronics, cabin interiors, information management systems, mission communications and simulation products for commercial and military aircraft.

Debi Durham, director of the Iowa Economic Development Authority, said state officials have reached out to the company, but are not actively involved in merger talks.

"Once a deal is done, assuming a deal does happen and there is some type of merger, we will want to get in front of that company as soon as possible at the highest level, at the governor's level," Durham said. "You can expect us to be very proactive at the appropriate time. But at this point we’re just in a wait-and-see position."

Durham said state officials can make a "great case" to United Technologies for keeping Rockwell Collins based in eastern Iowa. In such acquisitions, the actual manufacturing locations and existing, large employment bases don't face as much risk for upheaval as leaders at the highest levels of the company, she said.

"It really comes to where are the executives going to reside. And right now that’s all speculation," Durham said. "But I can assure you that we will be there very aggressively at the right time to position Iowa very well."

Connecticut-based United Technologies Corporation is a multinational conglomerate, holding companies that make Otis elevators and escalators, Pratt & Whitney aircraft engines and Carrier air conditioners. With more than 200,000 employees, United Technologies' sales topped $57 billion last year, according to company literature.

Transaction likely 'a play for power'

Buyers generally pay a premium for acquisitions, said Amrita Nain, an associate professor and director of the finance academy at the University of Iowa's Tippie College of Business.

And Rockwell Collins just closed a $6.4 billion deal to purchase Florida-based B/E Aerospace, which makes plane seats and interiors.

"I was actually surprised by the timing" of the merger talks, said Nain, who has followed Rockwell Collins, but has no direct knowledge of the merger talks. "It's almost as if (United is) paying a premium twice."

While many mergers are driven by desires to find inefficiencies and thus cut costs through a joint operation, Nain doesn't think that's a leading factor for United Technologies. Rockwell Collins is a fairly efficient and successful company with not a lot of room for cuts, she said.

She believes United wants a better bargaining position when purchasing aeronautical parts. And acquiring Rockwell Collins would bolster its buying power, offering the conglomerate "a better position to squeeze their suppliers for lower prices."

Some have posited that United Technologies could even spin off a separate avionics firm after acquiring a company like Rockwell Collins, she said.

"This idea that there's just money lying around that United Technologies can pick up by fixing things in Rockwell is unlikely," she said. "My sense is that United is thinking of this more as a play for power in that market. The bigger they get, the more they control the supply chain."

Nain doesn't think eastern Iowa has much to worry about: United Technologies generally allows its brands to operate "with a fair amount of independence." And she imagines Rockwell Collins would maintain a sizable employment base there after a potential merger.

But she agreed with Durham's assessment that the company's executive team may be on shakier ground.

"That is always a question. United Technologies is substantially larger than Rockwell is," she said. "Which of Rockwell's top management team stays on? Who leaves? That will be part of the negotiation."

State leaders increasingly target mergers

In recent years, Iowa leaders have proactively worked to keep newly acquired companies in Iowa.

After food producers Kraft and Heinz announced a merger in 2015, the state awarded the combined company nearly $5 million in incentives to maintain a manufacturing presence in Davenport.

The company announced plans to close a century-old factory in favor of a newer, more efficient factory that would require far fewer workers. Though Kraft Heinz could cut as many as 900 jobs in the transition, Durham in 2015 said the state's incentives helped keep the company from leaving Iowa altogether.

At that time, the director said she expected the state to continue creating similar economic development packages as large companies increasingly undertook mergers and acquisitions.

On Thursday, Dow Chemical Co. and DuPont closed a $150 billion merger.

Iowa leaders fought to land the headquarters of a new ag spinoff announced by Dow-DuPont, but ultimately lost out to Delaware.

But state officials still awarded the company millions to maintain its seed and bio-science presence in Johnston, at the DuPont Pioneer headquarters. In February 2016, state and local officials awarded about $17 million in incentives to the company.

At the time, Durham described the incentives as "extremely modest."

"I believe that decision-making as it relates to research and … that connection to the farmer is still going to be here in our backyard," she said last year.