United Technologies-Raytheon Merger to Create Long-Term Value


Last year United announced it was spinning off its escalator and air-conditioner businesses, which included the Otis elevator brand and Carrier air conditioners.

"The combined company, valued at more than $100 billion after planned spinoffs, would be the world's second-largest aerospace-and-defense company by sales behind Boeing Co., with annual revenue of roughly $74 billion this year", reports WSJ.com. A change in United States leadership from the 2020 election could have a substantial material effect on the combined business's bottom line.

United Technologies operates United Technologies Electronic Controls in Huntington, which had employed more than 700 production employees before the parent company moved those jobs to Mexico in 2017 and 2018.

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).

Hayes will become the CEO of Raytheon Technologies.

When United Technologies rebuffed an acquisition offer from Honeywell International in 2016, United Technologies chief executive Greg Hayes justified the decision partly by predicting that Boeing and Airbus would never accept having a supplier that would "build the plane from tip to tail". United Technologies provides plane makers with electronics, communications and other equipment, while Raytheon primarily supplies the US government with military aircraft and missile equipment.

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On the conference call, CEO Hayes said UTC and Raytheon barely compete against other.

The Raytheon-UTC deal will need U.S. antitrust approval and a green light from the Pentagon. "We're going to have to talk about that".

As part of the merger, Raytheon will consolidate its four business divisions into two: Intelligence, Space & Airborne Systems and Integrated Defense & Missile Systems. It also provides the electronic tolling system used on the Massachusetts Turnpike and other roads around the world. The Pentagon would be one of the new company's largest customers.

The companies will have combined debt of about $26 billion when the deal closes, with about $24 billion of that coming from United Technologies, the companies said in their statement.

United Technologies isn't paying a premium for Raytheon, taking into account the separation of the Otis and Carrier businesses, according to a person familiar with the matter, who asked not to be identified because the information is private. That leaves the aerospace business, anchored by its Pratt & Whitney jet engines and avionics components, including those made by Rockwell Collins, which Hayes bought past year for $23 billion. The combined company will be reportedly headquartered in Boston, MA. "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".