The Washington Post

Raytheon Corp.

- BY AARON GREGG aaron.gregg@wash­ Business · Investing · United States of America · Boeing · Belgium · West Ham United F.C. · United Airlines · Belarus · research and development · Iceland · John F. Kennedy · United States Department of Defense · Lockheed Martin · Airbus · Raytheon · United Technologies · Francis Pratt & Amos Whitney · Thomas Kennedy · Airbus A320neo

has agreed to merge with United Tech­nolo­gies, mak­ing it the sec­ond­largest U.S. aero­space com­pany.

Raytheon Corp., a mas­sive U.S. de­fense con­trac­tor best known for man­u­fac­tur­ing the Pa­triot mis­sile de­fense sys­tem, has agreed to merge with in­dus­trial tech­nol­ogy gi­ant United Tech­nolo­gies in an all-stock deal, the com­pa­nies an­nounced Sun­day. The com­bined com­pany will have an­nual sales of about $74 bil­lion, mak­ing it the se­cond-largest U.S. aero­space com­pany af­ter Boe­ing.

The newly formed Raytheon Tech­nolo­gies Corp. will be com­bined with United’s Collins Aero­space and Pratt & Whitney, both lead­ing pro­duc­ers of jet engines and en­gine parts. It will not in­herit United’s Car­rier air con­di­tioner busi­ness or its Otis el­e­va­tor com­pany, both of which are be­ing spun off un­der the terms of an ear­lier deal.

In a phone in­ter­view Sun­day, ex­ec­u­tives said the deal was driven by a de­sire to cre­ate a lead­ing aero­space tech­nol­ogy com­pany us­ing state-of-the-art hard­ware from the de­fense and com­mer­cial avi­a­tion in­dus­tries. The com­bined com­pany will employ more than 60,000 engi­neers, will have about 38,000 ac­tive patents, and will have enough fi­nan­cial fire­power to in­vest $8 bil­lion each year in re­search and de­vel­op­ment, they said.

“This is bring­ing two great tech­nol­ogy com­pa­nies to­gether to pro­vide tech­nol­ogy so­lu­tions to our aero­space and de­fense cus­tomers that no­body else could ever pro­vide,” said United Tech­nolo­gies chief ex­ec­u­tive Greg Hayes, who will lead the com­bined com­pany as chair­man and chief ex­ec­u­tive fol­low­ing a twoyear suc­ces­sion plan.

He said the com­bi­na­tion “is not about cost-take­out or job loss in the U.S.,” not­ing that the com­pany ex­pects to hire about 20,000 peo­ple in the next year.

Raytheon chief ex­ec­u­tive Thomas Kennedy, who will be­come chair­man of the new com­pany, said: “Tech­nol­ogy is a foun­da­tion for the en­tire com­pany, and then upon that we build a com­mer­cial busi­ness and a de­fense busi­ness.”

The com­pany should be ex­pected to make a strong play for the De­fense Depart­ment’s emerg­ing hy­per­sonic mis­siles pro­grams, in which Lock­heed Martin ap­pears to have an early lead. The com­pany will con­tinue to pur­sue con­tracts in mil­i­tary cy­ber­se­cu­rity, Kennedy said, build­ing on about 16 ac­qui­si­tions it has car­ried out in re­cent decades.

It also will give Raytheon a siz­able foothold in the com­mer­cial aero­space mar­ket for the first time in re­cent mem­ory. Be­fore the com­bi­na­tion, the lion’s share of Raytheon’s rev­enue came from the Pen­tagon and U.S. in­tel­li­gence agen­cies. Af­ter the merger, about half of its rev­enue will come from sup­ply­ing parts and com­po­nents to the com­mer­cial avi­a­tion mar­ket.

Pratt & Whitney, which op­er­ates as a sub­sidiary of United Tech­nolo­gies, builds the engines that power Air­bus’s A220, and A320­neo and A380 com­mer­cial jets. And it is a dom­i­nant provider of mil­i­tary jet engines, build­ing the su­per­sonic jet engines that power F-15, F-16 and F-35 fighter jets.

The deal is ex­pected to close in early 2020, sub­ject to reg­u­la­tory ap­provals.

Newspapers in English

Newspapers from USA