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

Daniel Fowler
June 12, 2019

President Trump expressed concern Monday about the merger between United Technologies and defense contractor Raytheon, questioning whether the move would hurt competition and make it more hard for the United States to negotiate defense contracts in the future.

The new entity will be called Raytheon Technologies when the deal closes in the first half of 2020, after United Technologies completes the separation of its Otis elevator and Carrier air-conditioner businesses, the companies said. Only Boeing, with annual sales of $101bn, and Airbus, at $74bn, would be bigger. Under the terms of the deal, UTC would own around 57 percent of the joint company. It would bring together Raytheon's expertise in missiles, targeting systems and defense electronics with Pratt & Whitney's jet engines business and Collins Aerospace's avionics expertise.

United Technologies Chairman Greg Hayes on Monday touted the company's impeding marriage with Raytheon as a boon to its stockholders and customers - which includes the Pentagon - saying it was endorsed unanimously by the defense company's board of directors. The two firms touted the new company's "expanded technology and R&D capabilities".

The combined company would be valued at well over $100 billion even after United Technologies completes the planned spin-off of a good chunk of its commercial, industrial wing.

The U.S. military has been increasingly interested in developing technology such as hypersonic weapons, which would fly at speeds of Mach 5 or faster, and laser weaponry.

"When I hear United and I hear Raytheon, which is another incredible company, the missile systems they make are incredible, when I hear they're merging - does that take away more competition?" United Technologies provides plane makers with electronics, communications and other equipment, while Raytheon primarily supplies the USA government with military aircraft and missile equipment.

For years, Defense Department procurement officials have raised concerns that mergers and acquisitions in the defense sector could hurt competition.

"We are looking forward to talking to the president later today", Hayes said.

Americans face backlash over biggest women´s World Cup win
Get the latest sports news updates. "This is a world championship, so every team here has been fantastic to get to this point". Perhaps the harshest criticism of the USA came from Canadian analysts on TSN's World Cup show.

Eventually, the companies expect the merger will cut $1 billion in costs annually, half of which will be returned to customers.

The Pentagon will submit its views to the Justice Department or the Federal Trade Commission.

Two years after the deal closes, Hayes will also become chairman.

A person familiar with the matter told the newspaper that United Technologies is likely to own a majority of the combined company.

An infographic on the proposed Raytheon-United Technologies merger.

Further, the two companies had a highly complimentary technology and research and development platform.

Raytheon Technologies is going to be headquartered in the greater Boston metro area and will retain a corporate presence in existing locations.

The net debt of the combined company at the time of closing is expected to be about $26 billion with United Technologies expecting to contribute approximately $24 billion.

Other reports by

Discuss This Article