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United Technologies to merge aerospace unit with Raytheon
Posted on Monday, 10 June 2019 11:43
Raytheon and United Technologies have announced a merger of equals that creates a USD 121.00 billion leading systems provider with advanced technologies within the aerospace and defence industry.
According to Zephyr, the M&A database published by Bureau van Dijk, this represents the largest ever deal in the sector.
The all-stock transaction, being described as a merger of equals, will offer a complementary portfolio, expanded technology and research and development capabilities, while also having significant near- and long-term benefits resulting in over USD 1.00 billion in gross annual costs synergies by year four.
It follows the announcement of United Technologies’ plan to separate into three independent companies in November.
The business said the split is still on track and the merger will be tax-free at completion, expected in the first half of 2020, following closing of the spin-off.
A merger, which creates a combined company with about USD 74.00 billion in annual sales, is slated to return between USD 18.00 billion and USD 20.00 billion to shareholders in the first 36 months.
Under the terms of the deal, Raytheon will receive 2.33 shares in the new group for every item of stock held, with United Technologies to control 57.0 per cent of the merged firm, while investors in the target will control the rest.
Net debt for the combined business is expected to be around USD 26.00 billion, of which the acquiror will contribute some USD 24.00 billion.
Shares in United Technologies closed up slightly to USD 132.15, while Raytheon also rose to USD 185.91 on 7th June, the last trading day prior to the announcement.
In November, the US-based manufacturer agreed to separate into three companies: aerospace, elevators and climate control, in a bid to better position each division for strategic focus and financial flexibility.
Shortly before announcing the split, United Technologies completed the acquisition of Rockwell Collins for USD 23.00 billion.
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