Raytheon-United Technologies Merger Gets Shareholder Nod
Zacks Investment Research | Oct 13, 2019 10:26PM ET
Raytheon Company (NYSE:RTN) recently announced that its merger with United Technologies (NYSE:UTX) has received approval from the companies’ shareholders. This reflects significant progress in the biggest-ever merger, announced in June 2019, in the history of the U.S. aerospace and defense space.
Following the approval, shares of Raytheon gained 0.6% on Oct 11.
A Brief Note on the Merger
The merger is expected to create Raytheon Technologies Corporation, a premier conglomerate worth $121 billion, whose advanced technologies will address rapidly growing segments within aerospace and defense. The combined company’s portfolio will comprise aerospace electronics, communications and other equipment from United Technologies along with Raytheon’s military aircraft and missile equipment.
The deal, a tax-free one, is expected to close in the first half of 2020, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals.
Why are Defense Bigwigs Resorting to Mergers?
Growing need for cost reduction, intensifying competition and increased control over production procedures have prompted defense industry bigwigs to engage in frequent mergers and acquisitions (M&As). Moreover, the current U.S. administration has been increasing the defense budget over the past couple of years. This must have encouraged defense biggies to strengthen their product portfolio through mergers.
Moreover, such consolidation of production by leading industry players usually improve economies of scale for the combined company. We believe these factors must have been driving forces behind the Raytheon-United Technologies merger.
Other M&As
In April 2018, General Dynamics (NYSE:GD) completed the acquisition of IT service provider CSRA Inc for $9.7 billion. The deal made General Dynamics the largest provider of integrated information technology services to the federal government. CSRA was known for its cyber security and data-analytics business along with its information technology know-how.
In June, Northrop Grumman (NYSE:NOC) completed the acquisition of Orbital ATK for $9.2 billion. The deal boosted Northrop Grumman’s missile portfolio substantially.
With each of these combined companies performing well in the U.S. aerospace and defense space at present, we expect Raytheon Technologies to reflect similar excellence over the coming years.
Zacks Rank
Raytheon currently carries a Zacks Rank #3 (Hold). You can see Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.