Mon, Jun 10, 2019 - Page 16 News List

Raytheon may join forces with United Technologies


United Technologies Corp and US arms giant Raytheon Co are in talks over a merger deal that could create one of the world’s biggest aerospace and defense companies, the Wall Street Journal reported on Saturday.

According to the newspaper, the two companies — which together have a market value of about US$166 billion — could announce an all-stock deal in the next few days.

The new entity would be the world’s second-largest defense company by sales after Boeing Co.

A person familiar with the matter told the newspaper that United Technologies is likely to own a majority of the combined company.

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

However, the proposed merger is not expected to affect plans by United Technologies to streamline by spinning off its Otis elevator and Carrier building-systems business into separate companies, which are expected to happen next year.

Even adjusting for the spinoffs, the combined market value of the merged company would be more than US$100 billion.

A United Technologies-Raytheon merger has long 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.

The US defense industry has been dominated for the past two decades by five contractors — Lockheed Martin Corp, Northrop Grumman Corp, General Dynamics Corp, Boeing and Raytheon.

An agreement could allow for increased scale and shared technology, as well as helping the enlarged company weather any slowdown in the commercial aerospace and defense industry as US companies face mounting challenges due to the trade dispute launched by US president Donald Trump against China.

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