Third Point Opposes United Technologies-Raytheon Merger -- Update
June 28 2019 - 01:01PM
Dow Jones News
By Allison Prang
Hedge fund Third Point LLC panned United Technologies Corp.'s
plan to merge with Raytheon Co. and is calling for the industrial
conglomerate to rethink the transaction.
In a Friday letter to United Technologies's board, Third Point
Chief Executive Daniel Loeb said UTC merging with Raytheon was a
"baffling change" of strategy, given UTC's aim to make itself more
focused.
UTC, which produces Pratt & Whitney jet engines, Otis
escalators and elevators and Carrier heating and cooling equipment,
last year said it planned to separate itself into three
companies.
Third Point, which owns a less than 1% stake in UTC, said it
would vote against the deal in its current form. Third Point was
also among calling for a potential breakup for UTC because of its
complexity.
The hedge fund said "the paucity of financial details was
peculiar and alarming" given how large the deal is. A merger
between UTC and Raytheon would create the world's second-largest
aerospace-and-defense company by sales. Boeing Co. would be
first.
Shares in United Technologies were down 0.1% in Friday morning
trading, while Raytheon's shares fell 0.7%.
Following planned spinoffs, UTC and Raytheon together -- which
would be called Raytheon Technologies Corp. -- would create a
company valued at over $100 billion. Fifty-seven percent of the
company's shares would be owned by UTC shareholders.
Third Point isn't the first activist investor to question the
companies' planned combination. William Ackman, of hedge fund
Pershing Square Capital Management, emailed UTC Chief Executive
Greg Hayes earlier this month saying he was extremely concerned and
"cannot comprehend the strategic logic" of the transaction.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
June 28, 2019 12:46 ET (16:46 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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