United Technologies, Raytheon merger will create US$121b firm

United Technologies, Raytheon merger will create US$121b firm

United Technologies, the conglomerate that owns businesses making everything from Otis elevators to Chubb door locks, is planning to spin off its non-aerospace companies, then merge its existing aerospace division with Tomahawk-missile-making Raytheon, if United States antitrust regulators approve the deal.

The combined companies are expecting to return $18 to $20 billion of capital to shareholders in the first 36 months following the completion of the merger. Trump said. "It becomes one big, fat, handsome company, but I have to negotiate, meaning the United States has to buy things, and does that make it less competitive?"

"I'm a little concerned about United Technologies and Raytheon", Trump told CNBC.

United Technologies chairman and chief executive Greg Hayes is expected to lead the combined company while Thomas Kennedy, the chairman and CEO of Raytheon - the fourth-largest U.S. defense contractor - would be chairman.

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, which Hayes said he hoped would be completed early next year.

The merged company will be called Raytheon Technologies Corporation.

The two companies argue they have very limited existing business overlap, with United Technologies specialising in supplying electronics to commercial plane makers, while Raytheon mostly manufactures guided missiles such as the anti-aircraft Patriot, which it sells to the USA government for up to $5 million each.

Hayes and Thomas Kennedy, Raytheon CEO, said there will be synergies for new products between the companies; marrying, for example, Raytheon's laser and directed energy systems with Pratt's power-generation and thermal management systems.

"A scenario whereby Raytheon would be competing longer-term against Lockheed Martin and a combined Northrop + (United Technologies) may have been an unacceptable outcome of consolidation for Raytheon". And the company will develop new and critical technologies faster and more efficiently than before.

DeNardi also once saw Boeing as the likely buyer of Raytheon, but said it may have been hobbled by the grounding of its fleet of its 737 Max aircraft.

Combing the companies will result in annual savings of $1 billion by year four, about half of which could go to the United States government, the companies said. "That would be the thing that bothers me most".

The Justice Department may require small divestitures where there's overlap between United Technologies and Raytheon.

Raytheon makes missile defense and radar systems, including the Patriot missiles, and other military technology used by militaries around the world.

"The combination of United Technologies and Raytheon will define the future of aerospace and defense", said Greg Hayes, Chairman and CEO of United Technologies.

The deal brings together two companies that have been intertwined with America's technological explosion of the past almost 100 years. And Wachtell, Lipton, Rosen & Katz is serving as legal advisor to United Technologies.

The merger is expected to be one of the largest of the year.

United Technologies, the parent company of Pratt & Whitney, is now headquartered in Farmington.



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