Raytheon, United Technologies Announce Merger

Raytheon is based in Waltham

United Technologies logo is displayed on a screen at the post where it's stock is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 5, 2017.

USA companies Raytheon and United Technologies are merging in a deal that will create one of the world's largest defence companies. We don't have to go to China. 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. "China trade split. A USA recession is overdue; 3) Defense firms will need to fund more of their own R&D in the future so joining a larger firm will limit margin pressure which could be evidenced in the 2020s", Callan wrote.

Under the deal, United Technologies' shareholders will own around 57 percent and Raytheon shareholders will own about 43 percent of the merged company.

Raytheon is best known for its Patriot air defence systems nd its Tomahawk cruise missiles. Currently, United Technologies has a market value of $114 billion while Raytheon's is about $52 billion.

Raytheon shareholders will receive 2.3348 shares in the combined company for each Raytheon share, the companies said in a statement. Raytheon will contribute seven of the 15 board positions, including the lead director. The merger will not include Carrier and Otis, now units of United Technologies but in the process of being spun-off by the first half of 2020.

Hayes will become the CEO of Raytheon Technologies.

United Technologies could benefit from reducing its exposure to commercial aerospace clients amid concerns that the rise of global trade protectionism will weigh on the flow of goods through air traffic.

"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. A deal with United Technologies would allow Raytheon to expand into commercial aviation, which does not rely on government spending like the defense sector.

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. It could also push other defence contractors, such as Lockheed Martin Corp., to explore expanding their commercial businesses. The transaction will create a premier systems provider with advanced technologies to address rapidly growing segments within aerospace and defense. Citigroup Inc was financial adviser to Raytheon, and RBC Capital Markets LLC provided a fairness opinion.



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