Raytheon
- United Technologies and Raytheon, two of the world’s largest aerospace and defense companies, have agreed to join forces.
- The combined company, Raytheon Technologies, could command a market capitalization of $120 billion and generate $74 billion in annual revenue.
- Shares of both companies were rallying in premarket trading Monday — United Technologies was up 5.2% and Raytheon was up 2.8%.
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Watch United Technologies and Raytheon trade live.
Two of the world’s largest aerospace and defense companies are joining forces with plans to create what would be the industry’s second-biggest player behind Boeing.
United Technologies, which makes electronics and engines for commercial aircraft, and Raytheon, which manufactures missile systems and military equipment for the US government, on Sunday announced plans to combine their businesses.
Shares of both companies were rallying in premarket trading — United Technologies was up 5.2% and Raytheon was up 2.8%.
If approved by regulators, the two plan to merge into Raytheon Technologies, creating a company with a $120 billion market capitalization and $74 billion in annual revenue. It would be a one-stop shop for Patriot and Tomahawk missiles, Pratt & Whitney F-35 fighter-jet engines, cockpit electronics, radars, and other products.
United expects to separate its air-conditioning and elevator businesses, Carrier and Otis, before the merger goes through in the first half of 2020. Raytheon shareholders would receive 2.3348 shares in the combined group for each Raytheon share they hold, giving them a 43% stake in the business. United CEO Greg Hayes would take charge of the group, with Raytheon’s boss, Tom Kennedy, serving as executive chairman.
United and Raytheon expect the tie-up to generate more than $1 billion in cost savings within four years of completion, and they plan to return $18 billion to $20 billion to shareholders in the first three years. They also plan to combine research budgets and teams to explore futuristic technologies such as hypersonics, directed energy weapons, and artificial intelligence in commercial aircraft.
The new company faces a mixed outlook under the Trump administration. Higher US defense spending and rising international tensions have fueled demand for fighter jets and munitions, according to Reuters. The US-China trade war, however, threatens to weigh on global economic growth and international trade flows, including by air.
