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(Updates sources of supply, redesign, adds context and context)
By Greg Roumeliotis
June 8 (Reuters) – United Technologies Corp. is in the process of concluding an agreement to merge its aerospace business with US defense contractor Raytheon Co and form a new company worth more than $ 100 billion, said one familiar with the case on Saturday.
As part of the merger, United Technologies and Raytheon seek to pool resources for the commercial aerospace and defense industries. United Technologies supplies commercial aircraft manufacturers with equipment such as electronic and communications equipment, while Raytheon is a primarily US-based supplier of equipment for military aircraft and missiles.
The deal would be structured as a peer-to-peer merger because United Technologies would separately split its Carrier air-conditioning business and its Otis elevator division, as previously announced, the source said.
If negotiations between United Technologies and Raytheon succeed, an agreement could be announced as early as Monday, said the source, asking not to be identified because the case is confidential.
United Technologies declined to comment, while Raytheon did not immediately respond to a request for comment.
United Technologies has a market capitalization of $ 114 billion, but without Carrier and Otis, its value could be less than $ 60 billion, which would bring it closer to Raytheon's market capitalization of $ 52 billion.
The Wall Street Journal first spoke of the potential deal, saying that United Technologies chief executive Greg Hayes would lead the newly-created company, while Raytheon's CEO Thomas Kennedy would be president.
United Technologies has announced it is on track to separate Carrier and Otis in the first half of 2020, leaving the company focused on its aerospace business through the acquisition of Rockwell Collins, finalized in 2018, and to the business. Pratt & Whitney engines.
The agreement with Raytheon could put pressure on General Electric Co, which is also competing with United Technologies for customers in the commercial aerospace sector, in order to gain scale.
Raytheon, a manufacturer of Tomahawk and Patriot missile systems, and other US arms manufacturers are expected to benefit from strong global demand for fighter jets and ammunition, as well as higher US defense spending in the United States. fiscal year 2020, under the leadership of the US government Donald Trump.
However, the agreement with United Technologies would allow Raytheon to expand into commercial aviation, which does not depend on public spending like the defense sector.
(Report by Greg Roumeliotis in New York, additional report by Rama Venkat in Bengaluru, edited by Leslie Adler and Meredith Mazzilli)
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