Categories: Media Moves

Coverage: Raytheon and United Technologies negotiate merger

Raytheon and United Technologies are in talks to consolidate their businesses, which could create a $120-billion defense giant.

Business Insider’s Theron Mohamed had the news:

Two of the world’s largest aerospace and defense companies are joining forces to create the industry’s second-biggest player behind Boeing.

United Technologies, which makes electronics and engines for the commercial-aviation sector, and Raytheon, which manufactures missile systems and military equipment for the US government, agreed to combine their businesses on Sunday, the companies announced.

Shares of both companies are rallying in premarket trading — United Technologies is up 5.2% and Raytheon is up 2.8%.

Bloomberg’s Rick Clough reported on the details:

Hayes will hold the CEO job in the combined organization, while Raytheon CEO Thomas Kennedy will become the executive chairman. Hayes will ascend to both roles three years after the deal closes.

Under terms, Raytheon shareowners will receive 2.3348 shares in the combined company for each Raytheon share they hold. When the dust settles, shareholders of United Technologies will own approximately 57% of the new firm on a fully diluted basis while Raytheon’s will own approximately 43%. Raytheon will contribute seven of the 15 board positions, including the lead director.

United Technologies isn’t paying a premium for Raytheon, taking into account the separation of the Otis and Carrier businesses, according to a person familiar with the matter, who asked not to be identified because the information is private. A conference call is scheduled for Monday morning.

Leslie Josephs from CNBC said the deal would reshape the aerospace and defense industry:

Raytheon and United Technologies have a combined market value of close to $166 billion. The stock price of each has gained more than 21% this year, far outpacing the broader market, as they’ve reaped the benefits of strong defense spending and record orders for passenger planes around the world.

The new company, which they plan to name Raytheon Technologies, would have approximate annual sales of $74 billion, putting it behind Boeing as the second-largest aerospace and defense company in the U.S. by revenue.

The combined company, with big footprints in both the fast-growing commercial aerospace business and an increase in military spending, may be emboldened to push back on big customers like Boeing, Airbus and Lockheed Martin in terms of pricing, aftermarket work and intellectual property.

Irina Slav

Recent Posts

Economist’s Bennet, WSJ’s Morrow receive awards

The Fund for American Studies presented James Bennet of The Economist with the Kenneth Y. Tomlinson Award…

4 hours ago

WSJ is testing AI-generated article summaries

The Wall Street Journal is experimenting with AI-generated article summaries that appear at the top…

5 hours ago

Cohen joining Bloomberg Tax

Zach Cohen is joining Bloomberg Tax to cover the fiscal cliff and tax issues on…

5 hours ago

Avila named interim editor for Automotive Dive

Larry Avila has been named interim editor for Automotive Dive, an Industry Dive publication. He…

5 hours ago

Reuters seeks a fact-checking editor

Reuters is seeking an experienced editor to take part in our fact-checking project and support the…

8 hours ago

Making financial news more accessible

CNBC Make It reporter Ashton Jackson writes about ways to make financial news more accessible to consumers.…

20 hours ago