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Merger approval for Raytheon and United Technologies

Raytheon and United Technologies have confirmed that shareowners of both companies have voted overwhelmingly to approve all of the proposals necessary to complete the merger of equals transaction to combine the companies and their subsidiaries.

The transaction is expected to close in the first half of 2020, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals, as well as completion by United Technologies of the separation of its Otis and Carrier businesses.

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This merger will see United Technologies' aerospace businesses, comprised of Collins Aerospace and Pratt & Whitney, combine with Raytheon.

Tom Kennedy, Raytheon chairman and CEO said, "I am pleased that the shareowners of Raytheon and UTC voted in favor of our powerful strategic combination. 

"Today's vote reflects a significant step on our path to unite two world-class companies with complementary technologies and supports our view that this merger of equals will create additional growth opportunities while delivering benefits to our shareowners, customers and employees."

The final vote results on the proposals voted on at the special meetings will be set forth in the companies' separate Form 8-Ks filed with the SEC after certification by each company's inspector of elections.

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Mr Kennedy's comments were reinforced by Greg Hayes, United Technologies chairman and CEO, who said, "Today is an important milestone in our transformational merger, which will define the future of aerospace and defence. With our technological and R&D capabilities, Raytheon Technologies will deliver innovative and cost-effective solutions aligned with the highest customer priorities for decades to come."

The combined company will have approximately $74 billion in pro forma 2019 sales. With a strong balance sheet and robust cash generation, Raytheon Technologies will enjoy enhanced resources and financial flexibility to support significant R&D and capital investment through business cycles.

Under the terms of the agreement, which was unanimously approved by the boards of both companies, Raytheon shareowners will receive 2.3348 shares in the combined company for each Raytheon share.

Upon completion of the merger, United Technologies shareowners will own approximately 57 per cent and Raytheon shareowners will own approximately 43 per cent of the combined company on a fully diluted basis.

The merger is expected to close in the first half of 2020, following completion by United Technologies of the previously announced separation of its Otis and Carrier businesses.

Upon completion, the merger expects to provide long-term value through: 

  • Balanced and diversified aerospace and defence portfolio that is resilient across business cycles: The merger establishes a broad and complementary portfolio of platform-agnostic capabilities across the high-growth segments of aerospace and defence, reducing risk of concentration in any individual platform or program.
  • Highly complementary technology and R&D platform: With a combined annual company and customer funded R&D spend of approximately $8 billion, seven technology centres of excellence, and over 60,000 engineers, the company will develop new, critical technologies faster and more efficiently than ever before. Areas of joint advancement include, but are not limited to: hypersonics and future missile systems; directed energy weapons; intelligence, surveillance, and reconnaissance (ISR) in contested environments; cyber protection for connected aircraft; next-generation connected airspace; and advanced analytics and artificial intelligence for commercial aviation.
  • Attractive financial profile with strong cash flow generation and balance sheet: Robust free cash flow growth and a strong balance sheet will support continued investment and return of capital to shareowners. The combined company expects to return $18 to $20 billion of capital to shareowners in the first 36 months following completion of the merger. As a result of the combination, the company also expects to capture more than $1 billion in gross annual run-rate cost synergies by year four post-close, with approximately $500 million in annual savings returned to customers. In addition, the combination presents significant long-term revenue opportunities from technology synergies.
  • Complementary company culture: The combined company will have a strong performance-based culture focused on integrity, collaboration, innovation, diversity and corporate social responsibility. Employees will have expanded opportunities for career development and advancement in high-growth areas, as well as ongoing engagement in local communities.

The timing of the separation of Otis and Carrier is not expected to be affected by the proposed merger and remains on track for completion in the first half of 2020. The merger is intended to qualify as a tax-free reorganisation for US federal income tax purposes.

Raytheon is a technology and innovation leader specialising in defense, civil government and cyber security solutions.

Raytheon provides state-of-the-art electronics, mission systems integration, C5I products and services, sensing, effects and mission support for customers in more than 80 countries. Raytheon is headquartered in Waltham, Massachusetts.

United Technologies Corp is based in Farmington, Connecticut, and provides high technology products and services to the building and aerospace industries.

Merger approval for Raytheon and United Technologies
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