Economy

Raytheon, United Technologies merger to create defense powerhouse

Raytheon, United Technologies merger to create defense powerhouse

Both companies have a heavy presence in Alabama, including Raytheon's missile testing and integration facilities on Redstone Arsenal. That brought a complaint from U.S. Sen.

Trump said in an interview on CNBC Monday morning that it's "hard to negotiate" as competition in the defense industry shrinks.

"I want to see that we don't hurt our competition", he said in an interview with USA broadcaster CNBC. "It becomes one big fat handsome company, but I have to negotiate, meaning the United States has to buy things".

"When I hear they're merging, does that take away more competition?"

Later, Trump said he hoped the merger could go forward, but reiterated his concern. And they repeatedly said that Raytheon and United Technologies do not compete with one another.

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"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", United Technologies CEO Greg Hayes said in a statement.

"There is nothing anti-competitive about this deal", Hayes added. I don't want to see that. Obama administration defense secretary Ash Carter told reporters in 2015 that he wanted to "avoid excessive consolidation in the defense industry to the point where we did not have multiple vendors who could compete with one another on many programs". A White House-commissioned report released last October concluded that "all facets of the manufacturing and defense industrial base are now under threat", and there are "entire domestic industries near extinction". "But I have to negotiate, meaning the United States has to buy things". I don't know, I don't love that stuff. "We truly believe we're going to get this done relatively quickly". United technologies said the merger would lead to $1bn in cost savings.

"The combined company, valued at more than $100 billion after planned spinoffs, would be the world's second-largest aerospace-and-defense company by sales behind Boeing Co., with annual revenue of roughly $74 billion this year", reports WSJ.com.

A model of the Patriot anti-missile system is seen at Raytheon's exhibition center at the Farnborough aerospace show, in Farnborough, U.K.in 2008.

Under terms, Raytheon shareowners will receive 2.3348 shares in the combined company for each Raytheon share they hold. He'll be the new company's executive chairman. "Raytheon Technologies will continue alegacy of innovation withan expanded aerospace and defense portfoliosupported by the world's most dedicated workforce", said Tom Kennedy, Chairman and CEO of Raytheon. When the dust settles, shareholders of United Technologies will own approximately 57% of the new firm on a fully diluted basis while Raytheon's will own approximately 43%. Along with last year's $23 billion acquisition of aircraft-parts supplier Rockwell Collins, the Raytheon deal remakes United Technologies as an aerospace giant with products including not only jet engines and missiles but other items like cockpit electronics and radars.