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On June 8, the Wall Street Journal announced that United Technologies Corp. and the American armaments giant Raytheon were in talks for a merger deal likely to create one of the world's largest aerospace and defense companies.
According to the newspaper, the two companies – which together represent a market value of approximately $ 166 billion – could announce a transaction involving only shares in the coming days.
The new entity would be the second largest defense company in the world in terms of sales after Boeing.
Someone familiar with this case told the paper that United Technologies would probably own the majority of the merged company.
United Technologies President and CEO Greg Hayes is expected to lead the merged company, while Thomas Kennedy, chief executive officer of Raytheon – the fourth largest defense contractor in the US – is chairman.
However, the proposed merger is not expected to affect United Technologies' plans to rationalize its operations by divesting its Otrier and Carrier building systems activities into separate companies, which is expected to occur next year.
Even taking into account the spin-offs, the combined market value of the company resulting from the merger would be greater than $ 100 billion.
Analysts and investors have been speculating for a long time on a merger between United Technologies and Raytheon, the two companies operating primarily in different segments, which means that an agreement will likely attract less attention from regulators than other mergers between major players in the defense.
Over the last two decades, the American defense industry has been dominated by five entrepreneurs: Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon.
An agreement could also help increase the size and sharing of technology, while helping the enlarged company cope with any slowdown in the aerospace and defense industry, while US companies face growing challenges due to the trade war launched by President Donald Trump against China.
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