Why UTX-RTN Merger Obstacles May Not End Anytime Soon


Jun. 12 2019, Published 7:37 a.m. ET

UTX-RTN merger

On June 9, United Technologies (UTX) and Raytheon Company (RTN) agreed to merge their businesses to create a new aerospace and defense powerhouse. The two companies have received unanimous approval from their respective boards.

The new company will be called Raytheon Technologies. UTX’s shareholders will have 57% ownership, while RTN’s shareholders will own 43% of the combined company’s shares.

The merger would create the world’s second-largest aerospace and defense company after Boeing (BA) in terms of annual revenues. The combined company is estimated to have nearly $74 billion in pro forma 2019 sales, while Boeing generated a record yearly revenue of $101 billion in 2018.

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Anti-trust approval concerns

However, it doesn’t seem like that the merger will go very smoothly. President Donald Trump and the Pentagon are concerned about reduced competition. In an exclusive interview with CNBC, Trump on Monday said he is worried that the merger would reduce competition, making it difficult for the government to negotiate defense contracts.

Bill Ackman opposes the merger

Now, Bill Ackman, a major UTX shareholder, has also expressed his disapproval of the merger. As the Wall Street Journal reported on June 11, Ackman is urging the company to call off its planned merger. He thinks it makes no strategic sense. Ackman sent an email to United Technologies’ chief executive, Greg Hayes, on Sunday, June 9, mentioning that he is “extremely concerned” about the combination.


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