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Home / Business / The merger of Raytheon and United Technologies could shake up the industry

The merger of Raytheon and United Technologies could shake up the industry



A Pratt & Whitney PW1000G turbofan engine sits on the wing of an Airbus A320neo on Friday, February 12, 2016, during a delivery ceremony in front of the Airbus Group SE plant in Hamburg.

Bloomberg | Krisztian Bocsi

United Technologies has reached an agreement to combine the booming aerospace business with defense company Raytheon. This surprise could unsettle customers and competitors alike. The spectrum ranges from tomahawk rockets and radar systems to jet engines that power passenger aircraft and the seats they sit on. 1

9659002] Raytheon and United Technologies together have a market value of nearly $ 166 billion. Each company's share price rose more than 21% this year, far outstripping the broader market, taking advantage of strong defense spending and record passenger airline orders around the world.

The new company, which they call Raytheon Technologies, has an annual turnover of approximately $ 74 billion, making it the second largest aerospace and defense company in the United States, behind Boeing.

The combined company, which is represented in both the fast-growing and the big footprints The commercial aerospace business and an increase in military spending could be encouraged, major customers such as Boeing, Airbus and Lockheed Martin in terms of pricing, retrofitting and to repulse intellectual property.

Boeing itself has attempted to gain more direct control In June 2018, Boeing 737 announced that it had entered into a venture with the French engine manufacturer Safran to manufacture auxiliary equipment for aircraft, a business that competes directly with Pratt and Whitney from United Technologies and Honeywell.

Earlier this year, Boeing announced a joint venture to manufacture aircraft seats with Adient

The merger of United Technology and Raytheon "creates these monster suppliers in aerospace and defense," said Richard Aboulafia, Air and aerospace analyst at the Teal Group.

Raytheon and United Technologies do not have many overlaps, generally rejecting such deals on a regulatory basis. However, customers may have different views. Boeing initially expressed concern over United Technologies' $ 23 billion acquisition of avionics and aircraft seat manufacturer Rockwell Collins.

The combination of the two companies could also rouse competitors. The deal comes just as industrial concerns rethink their businesses and focus on highly profitable units.

United Technologies announced last November that it plans to divide the company into three companies, hiving off the Carrier HVAC business and the Otis elevator business. The aerospace business, which includes newly-acquired Rockwell Collins and engine manufacturer Pratt and Whitney of United Technologies, would be the unit that merges with Raytheon.

The deal could put pressure on others in the industry such as Honeywell International and General Electric to produce jet engines and other aircraft parts and have sold other companies looking for partners to build high-performance units.

Last year, military outfitters Harris Corp. ,

"The logic of size is clearly moving forward," said Aboulafia. "It increases the pressure on her to do something."

The new company, Raytheon Technologies, would be headquartered in the Boston area. Raytheon is located in Waltham, Massachusetts, a suburb of Boston.


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