Raytheon-United Technologies merger is all about cutting-edge tech and research

Cornelia Mascio
Giugno 12, 2019

While billed as a merger of equals, current United Technologies shareholders will own most of the company after the transaction, which has an equity value of $86 billion, according to data compiled by Bloomberg.

"I'm a little concerned about United Technologies and Raytheon", Trump told CNBC's Squawk Box in a phone interview.

United Technologies chairman and chief executive Greg Hayes is expected to lead the combined company while Thomas Kennedy, the chairman and CEO of Raytheon - the fourth-largest USA defense contractor - would be chairman.

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.

Raytheon shareowners would receive 2.3348 shares in the combined company for each Raytheon share. United Technologies Corporation, comprised of Collins Aerospace and Pratt & Whitney, is headquartered in Farmington, Connecticut.

That means it still trails Boeing Co.in heft, but the deal may give the soon to be renamed Raytheon Technologies Corp., leverage with suppliers and contractors over other heavyweights in the industry like Lockheed Martin Corp. and Northrop Grumman Corp.

The new company, 57 percent owned by United Technology's shareholders, would be named Raytheon Technologies Corporation and be headed by United Technology's CEO Greg Hayes. United Tech's shares were down about 2 per cent at US$129.40, while Raytheon's stock was up 1.7 per cent at US$189.2 in morning USA trade. And the company will develop new and critical technologies faster and more efficiently than before.

Hayes will become the CEO of Raytheon Technologies. Raytheon also makes electronic warfare equipment and countermeasures for aircraft; the AN/ALE-60 towed decoy system and the Miniature Air-Launched Decoy (MALD) and MALD-J jammer variant.

But Trump, who has shown more willingness than past U.S. presidents to haggle with defense contractors and interject himself into the private sector in general, emerged as a potential question mark, telling CNBC Monday that he was "concerned" by the merger.

Waltham-based Raytheon was founded in 1922 and makes missiles - including the Patriot system - and cybersecurity tools.

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 also expects to capture 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.

Raytheon chief executive officer (CEO), Tom Kennedy, also touted the merger with United Technologies.

The Senate Armed Services Committee may press Shanahan about the merger - and whether he should recuse himself from deliberations on it because of his past role as an executive with Boeing Co., a United Technologies customer - at his expected confirmation hearing for defense secretary.

United Technologies businesses include engine maker Pratt & Whitney.

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