Raytheon, UTC tie-up wins regulatory approval

The Department of Justice has given the green light to the merger between Raytheon and United Technologies Corporation.

Reuters’ Diane Bartz reported:

The U.S. Justice Department has approved United Technologies Corporation’s planned merger with Raytheon Co, subject to conditions, the agency said on Thursday.

UTC agreed in June to combine its aerospace business with U.S. contractor Raytheon and create a new company worth about $121 billion, in what would be the sector’s biggest ever merger. It won EU antitrust approval earlier in March.

To win U.S. approval, the companies agreed to divest Raytheon’s military airborne radios business, including facilities in Indiana and Florida, and UTC’s military global positioning systems, including a facility in Connecticut.

The businesses are to be sold to BAE Systems Inc or another buyer approved by the Justice Department.

The companies are the only Defense Department suppliers for military airborne radios and military GPS systems for air and sea, the Justice Department said.

The Justice Department said that the two companies were among the few companies that made components for certain military satellites, including those that warn of missile launches. Because of this, the department also required the companies to sell UTC’s big space-based optical systems businesses.

David McLaughlin from Bloomberg wrote:

United Technologies Corp. won U.S. antitrust approval for its acquisition of Raytheon Co., a deal that will create an aerospace and defense giant.

The Justice Department’s antitrust division signed off on the deal after the companies agreed to sell assets to resolve competition concerns stemming from the tie-up, according to court papers filed Thursday in Washington.

The U.S. approval comes after BAE Systems Plc in January agreed to buy the military global positioning system arm of UTC’s Collins Aerospace unit for $1.93 billion, together with Raytheon’s airborne tactical radios operation at a cost of $275 million.

The Justice Department is also requiring the sale of UTC’s optical systems business used in space missions and defense laser warning systems, according to court papers.

United Technologies has said it expects the deal to close early in the second quarter.

Raytheon Technologies Corp., as the new company will be called, will be a defense-and-aviation powerhouse, with products such as missiles, jet engines and cockpit electronics. United Technologies plans to spin off its elevator and air-conditioner businesses before the Raytheon deal closes.