United Technologies To Acquire Raytheon In Massive Aero Merger


United Technologies and Raytheon secured one of the largest agreements within the industry to mark history.

The deal would reshape the competitive landscape by forming a conglomerate which spans commercial aviation and defense equipment.

Raytheon's stock traded about 1.4 percent higher to $188.55 per share Monday afternoon, while United Technologies traded lower by 2.2 percent at $129.20 per share.

"I want to see that we don't hurt our competition", Trump said in an interview with CNBC.

"I hope the Raytheon deal, I hope it can happen". "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". Last year, he closed a $23 billion purchase of Rockwell Collins, the aircraft parts supplier.

The Raytheon-United Technologies merger is set to close in the first half of 2020, after United Technologies completes the separation of its Otis elevator and Carrier air-conditioner businesses, the companies said in a statement Sunday.

It has a Pratt & Whitney division in Montreal, as well as aerospace units in the Toronto area. Boeing had initially pushed back against United Technologies' takeover of Rockwell Collins but dropped its opposition after getting the two companies to agree to a cost-cutting initiative and vowing to wrangle some of their targeted cost savings for itself. This resulted in the deal closing in November 2018, as opposed to the targeted third quarter.

The deal brings together two companies that have been intertwined with America's technological explosion of the past almost 100 years.

The proposed merger between United Technologies and Raytheon will likely directly benefit the federal government through reduced costs and improved technology, United Technologies CEO Greg Hayes told Cramer.

Mr Hayes will be named the chief executive of the new entity, while Raytheon chief executive Tom Kennedy will be appointed its executive chairman.

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Hayes spurned a merger offer from Honeywell International Inc.in 2016, saying the deal undervalued his company and would face customer opposition.

The headquarters will be in the Boston area; now United Technologies is based on Farmington, Connecticut, while Raytheon's headquarters is in Waltham, Massachusetts.

"We want to emphasize, particularly for the benefit of United Technologies employees, this does not mean that we're exiting operations in CT, and moving to Boston", said Hayes.

The companies are aiming for the merger to be complete by the first quarter of 2020, Hayes reported. The companies forecast returning $18 billion to $20 billion to shareholders within three years following merger completion.

Even adjusting for the spinoffs, the combined market value of the merged company would be above $100 billion. Richard Aboulafia of the Teal Group said Raytheon is best known for missile systems and defense-related cybersecurity products.

However, Pentagon spending is projected to slow down after an initial boost under Trump. The difference, of course, is that a United Technologies-Raytheon combination will be an aerospace and defense behemoth rather than a sprawling amalgamation of businesses with varying capital requirements, margin profiles and growth potential.

Morgan Stanley, Evercore and Goldman Sachs were financial advisers to United Technologies.

The International Air Transport Association, which represents about 290 carriers accounting for more than 80 per cent of global air traffic, cited these concerns earlier this month, when it said the industry is expected to post a $28 billion profit in 2019, down from a December forecast of $35.5 billion.

UTC and Raytheon do not compete directly in many markets and the deal may not attract significant scrutiny. The merger would create the sixth largest defense contractor in the U.S. and the tenth largest in the world.

The "merger of equals" between Raytheon and United Technologies into the new Raytheon Technologies would vault the No. 3- and No. 8-ranked U.S. defense contractors, respectively, into a joint No. 2 position, just behind Lockheed Martin, and is touted by the two companies' CEOs as a "platform agnostic" concern not dependent on any particular program.