Raytheon, United Technologies to merge


By the time the deal closes, United Technologies is expected to have finished spinning off its Otis and Carrier businesses - a move that was announced previously, as part of a focus on aerospace and engines. The Hartford Courant said about 100 UTC jobs would move to MA.

"The combined company, which will be named Raytheon Technologies Corporation, will offer expanded technology and R&D capabilities to deliver innovative and cost-effective solutions aligned with customer priorities and the national defense strategies of the USA and its allies and friends", a joint statement from the two companies read. United Technologies is estimating "more than $1 billion in gross annual run-rate cost synergies by year four post-close, with approximately $500 million in annual savings returned to customers". A change in U.S. leadership from the 2020 election could have a substantial material effect on the combined business's bottom line.

The Wall Street Journal is reporting that this weekend the management of defense contractor Raytheon agreed to merge in an all-stock deal with United Technologies (UTC).

In pre-market trading, United Technologies rose 6.5% to $140.70, while Raytheon was 2.8% higher at $191.16. According to the companies report, "upon completion of the merger, United Technologies shareowners will own approximately 57 percent and Raytheon shareowners will own approximately 43 percent of the combined company on a fully diluted basis". "It becomes one big fat attractive company, but I have to negotiate, meaning the United States has to buy things".

The Raytheon-UTC deal will need United States antitrust approval and a green light from the Pentagon. And they repeatedly said that Raytheon and United Technologies do not compete with one another.

Asked whether he would have a problem with the merger, Trump replied: "Only if they have the same products". "When I hear they're merging, does that mean we're taking away more competition?"

"Less than 1 percent of our sales have overlap", he said. "We're going to have to talk about that". "With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners". It would bring together Raytheon's expertise in missiles, targeting systems and defense electronics with Pratt & Whitney's jet engines business and Collins Aerospace's avionics expertise. It also provides the electronic tolling system used on the Massachusetts Turnpike and other roads around the world. United Technologies reportedly employs 240,000 and is presently headquartered in Farmington, CT. That leaves the aerospace business, anchored by its Pratt & Whitney jet engines and avionics components, including those made by Rockwell Collins, which Hayes bought a year ago for $23 billion.

Hayes is set to become the leader of the new company: He'll take the titles of chairman and CEO two years after the merger is finalized. "We've seen consolidation in the sector as a way to counter these pricing and competitive pressures, and also to diversify to add revenue streams". The company would retain its headquarters in the Boston area.