United Technologies Corp is in advanced talks to combine with defense contractor Raytheon. Insiders privy with the matter has indicated that the move by the conglomerate is to change into a company that focuses on defense and aerospace.
New company to be worth over $100 billion
The insider has stated that the companies whose combined market value is approximately $166 billion are likely to announce the deal as early as Monday providers talks don’t collapse in the last minute. The merger could create a new company that will be worth over $100 billion, thus consolidating the defense and aviation sectors. The move will bring leading suppliers of giants like Boeing, Lockheed Martin, and Airbus under one umbrella.
In 2018 the Wall Street Journal reported United Technologies’ splitting plans by 2020 into three companies by selling off the Carrier and Otis Elevator division as they look to focus in specific industries. The merger will, however, not affect these plans.
For Raytheon, the deal to combine the two companies will offer them exposure to the growing commercial aerospace market by leveraging United Technologies unit that produces a range of products from high jet engines to cockpit controls, cabin interiors and aircraft seats for passenger planes. On the other hand, United Technologies will equally benefit by getting a share of the defense and cyber security sectors.
Merger deal to be closed in 2020 after separation of United Technologies business
Following the combining of the aerospace business of United Technologies with Raytheon, Gregory Hayes the CEO of United Technologies will lead the merged company as the CEO of the company that will be called Raytheon Technologies while Thomas Kennedy the CEO of Raytheon will be the Chairman.
The deal is which is seen as a merger of equals will not close until 2020 when United Technologies have completely separated the carrier and Otis business. Once the deal is completed United Technologies stockholders will have a majority interest in the new company of around 53% while Raytheon shareholders will hold 47% stake. The board will have eight United Technologies board members and seven Raytheon Board members.
Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with our FREE daily email newsletter.