Raytheon and United Technologies may merge KGUN 9 Digital Staff 5:17

Mae Love
June 11, 2019

The merger is expected to close in the first half of 2020, following completion by United Technologies of the previously announced separation of its Otis and Carrier businesses. In 2018 there were eight mergers exceeding $1 billion in value, including an all-stock deal between L3 Technologies and Harris and General Dynamics' acquisition of CSRA Inc., according to PricewaterhouseCoopers. Since it would still leave the Defense Department with five big suppliers - and there is little overlap between Raytheon's and United Technologies' operations - it probably will not attract significant government resistance.

"When I hear they're merging, does that take away more competition?"

■ The new partners billed the deal as a "merger of equals", but United Technologies' CEO will be the new CEO, and its shareholders will hold 57 percent of the new shares. Each advanced more than 20% this year through June 7, in line with a Standard & Poor's index of aerospace and defense manufacturers.

"We used to have many plane companies. they have all merged".

"Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success", said Tom Kennedy, Raytheon Chairman and CEO. Hayes will ascend to both roles three years after the deal closes. The move creates a new company that will be called Raytheon Technologies Corporation which would have an estimated annual sales of $74 billion. The United Technologies-Raytheon merger would be the biggest ever in defence. Raytheon will contribute seven of the 15 board positions, including the lead director.

There are quite a few concerns that investors have with this proposed merger, including a lack of operational overlaps and synergies within business segments. United Technologies, comprised of Collins Aerospace and Pratt & Whitney, operates UTC Aerospace in Foley.

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Greater heft would enhance the ability of United Technologies to withstand cost pressures from customers such as Boeing Co. and Airbus SE, said Rothacker, the Bloomberg analyst. He went on to say that the U.S.

"Aerospace suppliers have been, and will continue to be, under huge pressure from Boeing and Airbus to cut costs", he said.

The merger, the largest of the year so far, will have to be approved by competition authorities and was questioned by president Donald Trump on Monday.

Another wildcard in winning approval for the deal: the U.S. Department of Defense.

The deal could help the two companies ramp up R&D spending and weather the expected slowdowns in USA defense spending. United Technologies has a current market value of $114 billion while Raytheon's is about $52 billion. There is no change to the 2019 financial outlook for either company. The combined company is anticipated to have almost $74 billion in pro forma 2019 sales, while Boeing had generated record yearly revenue of $101 billion in 2018.

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