Two of America’s largest aerospace defense manufacturers, Raytheon and United Technologies have announced a merger.
With combined annual revenue of $74 billion, the merger will make the new company the second largest aerospace defense manufacturer after Boeing.
The merger deal which has now been estimated at $121 billion will be the biggest in the aerospace and defense industry.
While the merger might not raise any concerns with the US antitrust authorities, it could unsettle the likes of Boeing, Airbus SE as well as the Pentagon who are customers to United Technologies.
This is because United Technologies is not a full-blown defense manufacturer. The company makes electronics, communications and other equipment for the commercial aviation industry and the defense industry.
The acceptance of the merger offer from Raytheon is surprising knowing that United Technologies had in 2016 rejected an offer from Honeywell International claiming that Boeing and Airbus SE could kick against a merger that will create a company that will build an aircraft from ‘tip to toe’.
However, as part of the merger deal, United Technologies said it will separate its Carrier air conditioning and Otis elevator businesses to focus on the aerospace industry.