United Tech-Raytheon merger set for launch

United Technologies announces it is acquiring defense contractor Raytheon leaving Connecticut and moving to Boston area

Raytheon, United Technologies to merge

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

The two organizations said it would be a "merger of equals" and it would boost development, while saving the U.S. government money. "It becomes one big fat lovely company, but I have to negotiate, meaning the United States has to buy things". "It's already non-competitive".

Last year, for instance, UTC completed its purchase of Rockwell Collins for $30 billion and the assumption of $7 billion in Rockwell debt. Every US military operation and regime change campaign since the Gulf War of 1991-from Iraq and Afghanistan to Yugoslavia, Libya, Somalia, Yemen and Syria-have included the launching of Raytheon-made Tomahawk cruise missiles, mostly from naval ships and submarines.

A United Technologies-Raytheon merger has always been speculated on by analysts and investors as the two companies operate mainly in different segments, meaning a deal is likely to attract less scrutiny from regulators than other mergers between big defense players. Besides the huge contracts awarded every day by the United States military itself, American arms dealers are in high demand around the world.

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

The newly created company is expected to return between $18 billion and $20 billion of capital to shareholders in the first three years after the deal's completion, the companies said. Richard Blumenthal, D-Conn. "That scrutiny must begin today". Once the merger is complete, United Technologies shareholders will own approximately 57% of the company; Raytheon shareholders will own the rest. United Technologies, the parent company of Pratt & Whitney, is now headquartered in Farmington.

Hayes also promised the merged company would keep a "corporate presence in existing locations".

Raytheon shareholders will receive 2.33 shares in the new company for each Raytheon share.

■ The new company would have a stock market value of about $100 billion, nearly double Raytheon's current value, after United Technologies completes the previously announced spinoffs of its Otis elevator and Carrier building services divisions. In corporate-speak, UTC said at the time that the decision allowed for "strategic focus and financial flexibility to deliver innovative customer solutions and drive long-term value". In two years, Hayes will rise to the role of chairman and CEO, the company said. Until then, Raytheon Chairman and CEO Tom Kennedy will be the executive chairman.

"Less than 1 percent of our sales have overlap", he said. But there is concern about the proposed tie-up in states with UTC facilities, including CT and North Carolina. Those entities will join Collins Aerospace (the recently acquired Rockwell Collins Inc.) and jet engine maker Pratt & Whitney - two of United's high-revenue divisions.

"I remain increasingly concerned about the rapid consolidating within defense and aerospace industry and the impact on competition", Murphy said.

Latest News