UPDATE 7 p.m. EST: United Technologies Corp. rejected Honeywell's recent bid to merge, citing antitrust concerns, the Wall Street Journal reported. 

Original story:

Honeywell International Inc. is in merger talks with United Technologies Corp. that could create an aerospace giant with annual sales of around $90 billion, according to anonymous sources who spoke to CNBC Monday. Discussions occurred this month with Honeywell offering mostly stock for its rival, the report said.

There is no assurance these talks will result in a deal, and some involved in the negotiations on the United Technologies side have expressed concerns the combination could face antitrust issues. Any agreement would be larger than the estimated $68.6 billion deal bringing together the American industrial behemoths Dow Chemical Co. and DuPont that was announced late last year.

Honeywell and United Technologies make many of the systems that go into commercial and military aircraft, so their proposed combination likely would face opposition from Airbus Group SE and Boeing Co.

Honeywell and United Technologies have been in talks off and on for much of the past year, but disagreements over which company would control the combined entity has stymied progress. In 2000, United Technologies was outbid by General Electric Co. in an attempt to take over Honeywell, but European antitrust regulators blocked the transaction.

In October, United Technologies dismissed Honeywell’s efforts to offer its shareholders a slight premium to support their combination. Since then, Honeywell’s equity has performed better than United Technologies’ stock, spurring Honeywell CEO David Cote to propose a new deal.

Honeywell and United Technologies are two of the largest companies in the aerospace industry, providing avionics to many aircraft. United Technologies also owns the aircraft engine maker Pratt & Whitney. Both firms make products used in building climate control systems, and any combination would face antitrust reviews in both the U.S. and Europe.

United Technologies’ (NYSE:UTX) share price jumped almost 5 percent after news of the talks broke Monday afternoon. Its price has plunged about 24 percent during the past 12 months and is down about 2 percent this year.

Honeywell’s (NYSE:HON) share price rose nearly 1 percent after news of the talks broke, but quickly fell back closer to its opening-bell price. Its price is up about 2 percent over the past 12 months and is up more than 4 percent this year.