====Raytheon (RTN) and United Technologies (UTX) announce all-stock merger of equals

United Technologies said Sunday that it struck a deal to merge with Raytheon, an all-stock transaction that would create an aerospace and defense giant rivaling Boeing.

• The deal could put pressure on peers to keep up with the pair, making other small-capitalization defense companies look all the more attractive as targets for acquisition. Together, United Technologies (ticker: UTX) and Raytheon (RTN) would have about $72 billion in aerospace and defense revenues.
• In July 2023, Raytheon Technologies Corporation officially changed its name to RTX Corporation.

The transaction will create a premier systems provider with advanced technologies to address rapidly growing segments within aerospace and defense. The combined company, which will be named Raytheon Technologies Corporation, will offer expanded technology and R&D capabilities to deliver innovative and cost-effective solutions aligned with customer priorities and the national defense strategies of the U.S. and its allies and friends. The combination excludes Otis and Carrier, which are expected to be separated from United Technologies in the first half of 2020 as previously announced.

• Under the terms of the agreement, which was unanimously approved by the Boards of Directors 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 percent and Raytheon shareowners will own approximately 43 percent 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. 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 reorganization for U.S. federal income tax purposes.
• 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.
• There is no change to either Raytheon's or United Technologies' financial outlook for 2019.