United Technologies To Acquire Raytheon In Massive Aero Merger

United Technologies Corp (UTC) plans to acquire Raytheon Company and combine its aerospace business with Raytheon to create an enormous company expected to be worth $120 billion—the largest merger to take place to date within the aerospace sector. The deal was announced on Sunday.

United Technologies' aerospace segment has focused on supplying commercial aircraft manufacturers with a wide variety of avionics and communications equipment, including a plethora of avionics systems installed through its UTC Aerospace Systems unit, which launched when UTC acquired Rockwell Collins last year.

Raytheon does most of its business with the United States government, delivering missile systems—such as the Patriot missile—and fixtures such as multiple-intelligence systems installed on military aircraft. Raytheon will consolidate its current businesses into Intelligence, Space & Airborne Systems and Integrated Defense & Missile Systems.

Review of the merger by the U.S. entities that rule on antitrust laws, including the Federal Trade Commission and the U.S. Justice Department, will look at any areas of overlap that might indicate the formation of a monopoly—while competitors like Boeing will surely weigh in as they see a potential reduction in competition amongst their major suppliers—a group to which United Technologies and Raytheon belong.

UTC didn’t move forward in a deal with Honeywell International in 2016 in part based on concerns over Boeing's reaction. Its acquisition of Rockwell Collins went ahead in November 2018 after approval from China’s market regulation administration was granted.

UTC will be spinning off its Carrier and Otis business units to focus on aerospace following these actions. Raytheon's two new business units will combine with Pratt & Whitney and Collins Aerospace to create the new entity, Raytheon Technologies Corp. It's estimated that the resulting company will see $1 billion in cost advantages over the next four years—but the deal isn't about job reduction. According to a report in the Washington Post, the company expects to hire roughly 20,000 people in the next year.

UTC expects to close the deal in the first two quarters of 2020. A webcast on the merger is available.