Raytheon and United Technologies have agreed to an all stock “merger of equals” in a deal that if approved creates an aerospace and defense powerhouse with annual sales exceeding $70 billion, second only to Boeing.
The deal is slated to close during the first half of 2020, following the previously announced United Technologies spin-off of its Otis elevator and Carrier building systems units.
Just last week, in fact, United Technologies appointed new CEOs for these independent stand-alone public companies.
The newly-formed company will be known as Raytheon Technologies Corp, and adjusted for the spin-offs will have around $74 billion in pro forma 2019 sales. It will be headquartered in the greater Boston area.
Under the terms of the agreement, Raytheon shareholders will received 2.3348 shares of the combined company for each Raytheon share; United Technologies shareholders will own approximately 57% of the new company leaving the remainder with Raytheon shareholders.
“Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success. Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world’s most dedicated workforce,” Raytheon chairman and CEO Tom Kennedy, said in a statement. “With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners.”
In his own statement, Kennedy’s counterpart at United Technologies Greg Hayes said that, “The combination of United Technologies and Raytheon will define the future of aerospace and defense. Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution. By joining forces, we will have unsurpassed technology and expanded R&D capabilities that will allow us to invest through business cycles and address our customers’ highest priorities. Merging our portfolios will also deliver cost and revenue synergies that will create long-term value for our customers and shareowners.”
The companies claim such synergies will gross more than $1 billion annually.
Hayes will lead the post-merger company as CEO, with Kennedy assuming the role of executive chairman.
United Technologies aerospace products include jet engines manufactured by subsidiary brand Pratt & Whitney. Raytheon produces the Tomahawk and Patriot missiles, among other military weaponry.
But there isn’t much overlap in the two companies defense businesses.
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