Raytheon Co. and United Technologies Corp. plan to combine next year to form one of the world’s largest aerospace and defense companies through what they announced as an all-stock merger of equals.
Raytheon has operations in Fort Wayne and is among the city’s larger private employers. A list of Allen County’s top 100 employers maintained by Purdue University Fort Wayne’s Community Research Institute said Raytheon employed 540 locally.
United Technologies has operations in Huntington, which provide its Carrier business with engineering, research and development and administrative support.
Raytheon is known for its defense business, including the Tomahawk and Patriot missiles, and United Technologies is known for its Collins Aerospace and Pratt & Whitney aerospace businesses. The merger will exclude Carrier and Otis, which will be separated from United Technologies during the first half of next year, as previously announced.
The merger has been approved by Raytheon’s and United Technologies’ boards. If the deal receives the required regulatory approvals, Raytheon will consolidate its four businesses into two, which will be called Integrated Defense & Missile Systems and Intelligence, Space & Airborne Systems.
They will join Pratt & Whitney and Collins Aerospace to form the four businesses of the new company, Raytheon Technologies Corp.
With about $74 billion in pro forma sales this year — based on projections of the companies that would create it — Raytheon Technologies would have robust cash generation and a strong balance sheet, and its research and development would benefit from improved financial flexibility and resources, they said in a statement.
Raytheon shareowners will get 2.3348 shares in the new company for each Raytheon share, the statement said.
United Technologies shareowners will own about 57% of the new company and Raytheon shareowners will own close to 43% of it after the merger is completed during the first half of next year.
“Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success,” Tom Kennedy, Raytheon chairman and CEO, said in the statement June 9, the day of the merger announcement.
“Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world’s most dedicated workforce,” he said.
“With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners,” he said.
“The combination of United Technologies and Raytheon will define the future of aerospace and defense,” Kennedy said.
Greg Hayes, United Technologies chairman and CEO, expects the combination of the companies to define the future of defense and aerospace, he said in the statement.
“Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution,” he said.
“By joining forces, we will have unsurpassed technology and expanded R&D capabilities that will allow us to invest through business cycles and address our customers’ highest priorities,” Hayes said.
“Merging our portfolios will also deliver cost and revenue synergies that will create long-term value for our customers and shareowners.”
The new company is expected to see more than $1 billion in annual cost synergies with close to $500 million in savings returned to customers by the fourth year after the merger has closed, the statement said.
With headquarters in the Boston area, the new company’s board will consist of eight directors from United Technologies and seven, including the lead director, from Raytheon.
Kennedy will serve as executive chairman of Raytheon Technologies and Hayes will be its CEO. Hayes will become chairman and CEO of the new company two years after the merger closes.