Trump Raises Possible Concerns Over Raytheon-United Technologies Merger Plan

Trump Raises Possible Concerns Over Raytheon-United Technologies Merger Plan

Raytheon Company and United Technologies Corp. have entered into an agreement to combine in an all-stock merger of equals.

The headquarters of the new merged company, called Raytheon Technologies, would be in the greater Boston area.

United Technologies Chief Executive Greg Hayes said he saw very few regulatory hurdles for the proposed merger.

While United Technologies and Raytheon have some common customers, their business overlap is limited, an argument the companies plan to make once US antitrust regulators start scrutinizing the merger.

"I'm a little bit concerned about United Technologies and Raytheon", the president told the television network CNBC. Each advanced more than 20% this year through June 7, in line with a Standard & Poor's index of aerospace and defense manufacturers. "But I have to negotiate - meaning the United States has to buy things, does that make it less competitive?"

"This merger's going to bring together two leading companies with unsurpassed technological capabilities, both for today and into the future", said Hayes.

Under the deal announced on Sunday, Raytheon shareholders will receive 2.3348 shares in the combined company for each Raytheon share. Approximately 57% of its shares will belong to United Technologies shareowners, with the remaining approximately 43% to Raytheon shareowners. Raytheon will contribute seven of the 15 board positions, including the lead director.

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According to an in-depth investigation by In These Times published last month, Raytheon is one of the major providers of missiles and other weaponry to Saudi Arabia, which-with the backing of the United States-has been waging a vicious assault on Yemen since 2015. A conference call is scheduled for Monday morning. United Technologies bought Rockwell Collins, which has a facility in Richardson, in 2018.

The new defense and aerospace company would be second only to Boeing in the USA, according to the most recent Forbes 500 rankings by annual revenue. "Before the combination, the lion's share of Raytheon's revenue came from the Pentagon and US intelligence agencies".

"Aerospace suppliers have been, and will continue to be, under enormous pressure from Boeing and Airbus to cut costs", he said.

"Especially an aerospace and defense company, when they're looking around the country, if they see a company like Raytheon, they know that they may have a ready workforce".

Analysts note there still is a chance the deal might be scuppered, either by shareholders of each company or federal regulators. In any case, it is likely that the Pentagon and Wall Street will have their way regardless of Trump's phony objections. "Collins provides large space imaging mirrors used in surveillance satellites but it's not clear to us if there is an overlap with Raytheon's classified space payload work".

Even adjusting for the spinoffs, the combined market value of the merged company would be above $100 billion. There is no change to the 2019 financial outlook for either company. He has recused himself from dealings involving Boeing, which uses United Technologies products such as engines from its Pratt & Whitney engines division.