A $100-bn firm in the making: Raytheon, United Tech are in merger talks

Representative image

United Technologies Corp and US arms giant Raytheon are in talks over a merger deal that could create one of the world's biggest aerospace and defense companies, the Wall Street Journal reported Saturday.

According to the newspaper the two companies -- which together have a market value of roughly $166 billion -- could announce an all-stock deal in the next few days.

The new entity would be the world's second-largest defense company by sales after Boeing.

A person familiar with the matter told the newspaper that United Technologies is likely to own a majority of the combined company.

United Technologies chairman and chief executive Greg Hayes is expected to lead the combined company while Thomas Kennedy, the chairman and CEO of Raytheon -- the fourth-largest US defense contractor -- would be chairman.

But the proposed merger is not expected to affect plans by United Technologies to streamline by spinning off its Otis elevator and Carrier building-systems business into separate companies, expected to happen next year.

Even adjusting for the spinoffs, the combined market value of the merged company would be above $100 billion.

A United Technologies-Raytheon merger has long been speculated on by analysts and investors as the two companies operate mainly in different segments, meaning a deal is likely to attract less scrutiny from regulators than other mergers between big defense players.

The US defense industry has been dominated for the past two decades by five contractors -- Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon.

An agreement could also allow for increased scale and shared technology, as well as helping the enlarged company weather any slowdown in the commercial aerospace and defense industry as US companies face mounting challenges due to the trade war launched by US president Donald Trump against China.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel