United Technologies Strikes Deal to Merge With Raytheon
June 10 2019 - 4:43AM
Dow Jones News
By WSJ City
United Technologies doubled down on the aerospace market with an
all-stock deal to merge with defense contractor Raytheon after UTC
executives earlier chose to exit the escalator and air-conditioner
businesses.
The combined company, valued at more than $100bn after planned
spinoffs, would be the world's second-largest aerospace-and-defense
company by sales behind Boeing, with annual revenue of about $74bn
this year.
KEY FACTS
--- The proposed deal intensifies the consolidation in the
aerospace and defence industry as plane makers seek better terms
from suppliers.
--- The Pentagon is also putting more pressure on contractors to
cut costs and invest more in new technologies.
--- The new company will be named Raytheon Technologies, and
executives on Sunday called the deal a merger of equals.
--- Executives said the merger would allow them to boost
research spending and squeeze out some $1bn in annual costs from
the marriage.
Why This Matters
The combined entity would be split about 50/50 between
commercial and defence sales, though military is likely to shrink
as a proportion as UTC's Pratt & Whitney division ramps up
deliveries of its latest jetliner engines. One-third of the two
companies' aerospace and defense revenue last year -- some $25bn --
came from the Pentagon.
"There is some truth to the idea that bigger is better,"
Jefferies analyst Sheila Kahyaoglu wrote in a note to clients on
Sunday. "With common customers there is some leverage to size and
the supply chain."
A fuller story is available on WSJ.com
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(END) Dow Jones Newswires
June 10, 2019 04:28 ET (08:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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