Trump Raises Possible Concerns Over Raytheon-United Technologies Merger Plan

Lloyd Doyle
June 12, 2019

"We look forward to working with Raytheon Technologies Corp, to provide the best capabilities our warfighters deserve, as the greatest value to the taxpayer".

The merger, announced Sunday and expected to close in the first half of 2020, would potentially upend the aerospace sector, creating a conglomerate spanning commercial aviation and defense procurement.

The Raytheon-United Technologies merger still has to be approved by the US Justice Department and US Federal Trade Commission.

The combined company, named Raytheon Technologies Corp., will be a powerhouse of defense research and technology, with total sales of approximately $74 billion this year. "UTX also gets to de-lever with Raytheon's balance sheet and Raytheon holders get compensated in return".

"Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success". Under the merger agreement, United Technologies stockholders will own 57% of Raytheon Technologies and Raytheon shareholders will own the rest of the new company. "With our enhanced capabilities, we will deliver value to our customers byanticipating and addressing their most complex challenges, while delivering significant value to shareowners". The new entity would have a diversified portfolio, which will reduce the risk of business concentration in one area. United Technologies provides primarily commercial plane makers with electronics, communications and other equipment, whereas Raytheon mainly supplies the US government with military aircraft and missile equipment.

The combined companies have highly complementary technology and R&D platforms.


In a call with investors Monday morning, executives from both companies offered vague answers when asked whether they have received feedback from the Defense Department on the issue.

Part of the rationale for the deal is the huge investment needed to develop next-generation equipment such as weapons which fly faster than the speed of sound and incorporating artificial intelligence into defence systems.

Further, the two companies project annual cost-saving of $1 billion beginning in the fourth year after the close of the transaction. And the new businesses will join Collins Aerospace and Pratt & Whitney to form the four businesses of Raytheon Technologies.

United Technologies fell 1.7% to $125.84 at 9:51 a.m.in NY, posting the biggest drop on the Dow Jones Industrial Average for the second straight day. Their merger would create a one-stop shop that produces and sells everything from radar systems to fighter and passenger planes, a market dominance that could make many big players like Lockheed Martin, Boeing, and General Electric nervous. Raytheon Chairman and CEO Tom Kennedy will be appointed executive chairman.

UTC Chairman Gregory Hayes said he hoped to speak to the president about the proposed merger on Monday afternoon.

The headquarters will be in the Boston area; now United Technologies is based on Farmington, Connecticut, while Raytheon's headquarters is in Waltham, Massachusetts. And the company will be led by a proven leadership team with a strong track record of innovation.

Other reports by Iphone Fresh

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