Ackman Opposes United Technologies-Raytheon Deal--1st Update
June 11 2019 - 4:57PM
Dow Jones News
By Cara Lombardo
William Ackman, a big United Technologies Corp. shareholder who
earlier pushed the industrial giant to streamline its business, is
now urging the company to call off its planned megamerger with
Raytheon Co., which he says makes no strategic sense.
The activist investor sent an email to United Technologies Chief
Executive Greg Hayes early Sunday morning after The Wall Street
Journal reported on the impending deal. He wrote that he was
"extremely concerned" about the combination, according to a copy of
the email seen by the Journal. The companies confirmed their plan
to merge later Sunday.
The all-stock transaction would create an aerospace-and-defense
giant, eclipsed in sales only by Boeing Co and Airbus SE. The
proposed takeover, which doesn't include a premium for Raytheon
shareholders, would take place after United Technologies completes
a plan to spin off its Otis elevator and Carrier building-systems
businesses in the first half of next year and become primarily an
aerospace business. The addition of Raytheon's big defense
franchise would create a company with a valuation exceeding $100
billion -- assuming shareholders and regulators approve it.
Raytheon shares ended down 5.1% at $177.62 on Tuesday, with
United Technologies off 4% at $122.94.
Executives billed the deal as a merger of equals that would
allow them to cut costs, share technology and protect against a
slowdown in demand.
Mr. Ackman begged to differ.
It "makes no sense to us why you would consider a stock
acquisition using today's massively undervalued UTC common stock to
buy a large business of inferior quality to the company's existing
businesses, and for which we cannot comprehend the strategic
logic," Mr. Ackman wrote. He added that if United Technologies
followed through with the deal, Pershing Square would oppose it,
publicly if needed, as would a "substantial majority" of other
shareholders.
United Technologies said Tuesday: "We are confident that our
shareholders will see the merits of this transaction and the value
it brings to them and the company. We will be working diligently in
the days and weeks ahead to make sure that the details of the
transaction are presented to and fully understood by all
shareholders." Raytheon representatives had no immediate
comment.
Doug Cameron and Thomas Gryta contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
June 11, 2019 16:42 ET (20:42 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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