Trump ‘A Little Concerned’ About Raytheon Merger

A United Technologies Raytheon merger has long been speculated on by analysts and investors

A United Technologies Raytheon merger has long been speculated on by analysts and investors More

The merger, announced Sunday, will close in the first half of 2020 after United Technologies completes the previously planned separation of its Otis and Carrier businesses.

Trump said aerospace companies had "all merged in so it's hard to negotiate" with them and suggested the defense industry could be heading in the same direction.

We have reached out to Raytheon Tucson for a response to this report. "It becomes one big fat attractive company, but I have to negotiate, meaning the United States has to buy things". Last June, on the eve of announcing plans to direct the Defense Department to create a new "space force", Trump criticized Lockheed Martin and Boeing's United Launch Alliance joint venture, saying: "I don't like when Boeing and Lockheed get together because the pricing only goes up, but that's okay in this case. Does that make it less competitive, because it's already noncompetitive".

Asked in an interview on CNBC whether he would have problems with the merger, President Trump replied, "Only if they have the same products. That would be the thing that bothers me most".

Raytheon and United Technologies are combining in what they describe as a merger of equals.

Hayes will be named CEO of Raytheon Technologies, with Tom Kennedy, current CEO and chairman of Raytheon, as executive chairman of the combined company.

Last year, military communication equipment providers Harris Corp and L3 Technologies Inc announced an all-stock merger that, once completed, will create the sixth-largest US defence contractor.

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Under the deal, the new Raytheon will consolidate its operations into four businesses: one based on intelligence and aerospace, and another based on defense and missile systems. That leaves the aerospace business, anchored by its Pratt & Whitney jet engines and avionics components, including those made by Rockwell Collins, which Hayes bought a year ago for $23 billion.

The companies said they will be able to develop new technologies more quickly with combined R&D spending of $8 billion annually and more than 60,000 engineers. The combined company will be reportedly headquartered in Boston, MA. The merger is expected to result in more than $1 billion in cost synergies by the end of the fourth year, the companies said.

"Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution", said United Technologies Chairman and CEO Greg Hayes in a statement.

United Technologies operates United Technologies Electronic Controls in Huntington, which had employed more than 700 production employees before the parent company moved those jobs to Mexico in 2017 and 2018.

UTX and RTN have followed in the footstep of Harris (HRS) and L3 Technologies (LLL), which previous year announced an all-stock merger.

On the conference call, CEO Hayes said UTC and Raytheon barely compete against other.

Greater heft would enhance the ability of United Technologies to withstand cost pressures from customers such as Boeing Co. and Airbus SE, said Rothacker, the Bloomberg analyst. Most of Raytheon's revenue comes from the Pentagon and US intelligence agencies.

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