Pentagon in talks with industry on United Technologies and Raytheon merger: statement

Andrew Cummings
June 12, 2019

The deal will be reviewed by either the Justice Department or the Federal Trade Commission to ensure that it complies with antitrust law.

In a first sign of opposition, Representative Ro Khanna, a member of the House Armed Services Committee, said he will seek a congressional hearing on the merger and its impact.

Those savings are one reason the US Department of Defense "is going to really like this deal", Hayes told analysts on a conference call.

USA military contractors are not short of customers.

The net debt of the combined company at the time of closing is expected to be about $26 billion with United Technologies expecting to contribute approximately $24 billion. Raytheon slid 2.4% to $182.66.

The proposed Raytheon-UTC merger is part of a longtime trend of consolidation in the defense industry. Chewning oversaw reviews including Northrop Grumman Corp.'s purchase of Orbital ATK.


Raytheon and United Technologies have entered into an agreement to combine in an all-stock merger of equals.

Shanahan has recused himself from decisions on Boeing contracts, and the Pentagon's inspector general cleared him of allegedly making inappropriate comments supportive of the Chicago-based planemaker. He has recused himself from dealings involving Boeing, which uses United Technologies products such as engines from its Pratt & Whitney engines division.

United Technologies Chairman Greg Hayes on Monday touted the company's impeding marriage with Raytheon as a boon to its stockholders and customers - which includes the Pentagon - saying it was endorsed unanimously by the defense company's board of directors.

In an Australian context, Raytheon supplies sensors, effectors, electronic warfare and mission systems to various Australian Defence Force platforms.

"I want to see that we don't hurt our competition", Trump said in an interview with CNBC.

President Donald Trump expressed some concern about the latest merger on Monday morning.


"It will probably take them six to nine months, anyway, to close the deal, and I imagine over that period of time some of that stuff will probably get worked out, but the really positive thing in this, they said point-blank that people are so fired up about the quality of the talent in MA that that made this decision a lot easier for both companies", Baker told reporters Monday afternoon. But I don't want to see where we have one less person that can compete for an order [for aeroplanes],' said Trump.

The president continued by noting that there were many airline companies until they "all merged in so it's hard to negotiate".

Asked whether he would have a problem with the merger, Trump replied: "Only if they have the same products. They have some overlap as I understand". "It's no good", Trump said. "I think from a regulatory standpoint, the beauty of this deal is there's very little overlap ..."

The merger, announced Sunday and expected to close in the first half of 2020, would potentially upend the aerospace sector, creating a conglomerate spanning commercial aviation and defense procurement.

The merger, if approved by the government and the two companies' shareholders, would create what the Washington Post described as a "military-industrial behemoth" with the power to rival Lockheed Martin, the world's largest defense contractor.


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