Raytheon, a major U.S. defense contractor and aircraft manufacturing company, United Technologies Corporation, recently announced that they will be joining forces to create an aerospace & defense powerhouse. The companies would merge in an all-stock deal. It is expected to be one of the biggest corporate mergers of 2019, cite sources.
Reportedly, the merger will combine United Technologies’ aerospace business of jet engines, airplane seats & cockpit controls with that of missile maker Raytheon. The new company, which they are planning to name Raytheon Technologies, is anticipated to have annual revenue of about $74 billion, making it the second-largest aerospace & defense company in the U.S. by revenue.
Greg Hayes CEO & Chairman, United Technologies was reportedly quoted saying that by joining forces, the companies will have access to unique technology & expanded R&D capabilities. This will allow the companies to invest in businesses to address customers’ highest requirements, Hayes added.
In a statement, the two firms confirmed the new company to be headquartered in the Boston area. According to the terms of the deal, shareholders of United Technologies would own 57% of the combined company while Raytheon’s shareholders would own 43% on diluted basis.
As per credible sources, United Technologies is planning to shed businesses to focus on profitable units. It is in the middle of spinning its Carrier air conditioning unit & Otis elevator business into separate companies. The process would not be affected by merger with Raytheon. The two companies have been calling the deal “merger of equals” and it is expected to be closed in the first half of 2020.
Greg Hayes would become CEO of the combined company and Thomas Kennedy, CEO, Raytheon, would become chairman. Within 2 years, after the deal closes, Greg Hayes would become chairman.
According to sources close to the matter, United Technologies & Raytheon are expected to have a combined market value of $166 billion. In the new company, Raytheon shareholders will get 2.3348 shares for each Raytheon they hold.