Lamont Explains What United Technologies Merger Means For CT

FARMINGTON, CT — On Sunday it was announced that the state's largest employer, United Technologies Corp., and Raytheon Company agreed to a massive merger that is expected to be formally announced on Monday.

UTC's headquarters are based in Farmington, CT, and the company employs nearly 20,000 people in the state at Collins Aerospace and Pratt & Whitney. In a press release announcing the merger, both companies said the new company, Raytheon Technologies, will be headquartered in the greater Boston metro area.

The merger still requires regulatory approvals, the approval of Raytheon and United Technologies shareholders, as well as completion by United Technologies of the separation of its Otis and Carrier businesses. The transaction is expected to close in the first half of 2020.

Gov. Ned Lamont late Sunday released the following statement regarding United Technologies Corporation (UTC) and its future in Connecticut. Lamont confirms that about 100 people will be relocating from Connecticut to the new headquarters which is planned in Massachusetts.

“UTC and its subsidiaries, including Pratt & Whitney, Otis Elevator, and Collins Aerospace, continue to be an important part of Connecticut’s fabric. It’s important to note that nearly all of UTC’s 19,000 employees will remain in Connecticut, with roughly 100 moving to the new headquarters.

“I’ve spoken directly with Greg Hayes and made it clear that Connecticut will always be open should things change, as they often do. This serves as reminder that we live in an increasingly competitive economy, domestically and internationally. As such, it’s critical we invest in education, workforce development, and our transportation infrastructure to stay competitive.

“Our economic development team, led by Jim Smith, Indra Nooyi, and David Lehman, is already aggressively shifting their business development strategy, including redesigning the Connecticut Economic Resource Center to match the speed and flexibility necessary to compete and succeed in the 21st century economy and job market. We will continue to market our state as a fantastic place to live, work, and locate a business," Lamont said in a news release.

Particulars of the deal

Both companies have entered into an agreement to combine in an all-stock merger of equals. The merger of Raytheon, a leading defense company, and United Technologies, a leading aerospace company, comprising Collins Aerospace and Pratt & Whitney, will offer a complementary portfolio of platform-agnostic aerospace and defense technologies, the news release states.

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.

The combined company will have approximately $74 billion in pro forma 2019 sales. Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, Raytheon shareholders will receive 2.3348 shares in the combined company for each Raytheon share.

Upon completion of the merger, United Technologies shareholders will own approximately 57 percent and Raytheon shareholders will own approximately 43 percent of the combined company on a fully diluted basis.

CT Leaders React to UTC Merger

U.S. Senator Chris Murphy (D-Conn.) released the following statement on Monday after it was announced that United Technology Corporation (UTC) would be merging with Raytheon:

“I have serious concerns about the impact this merger will have on our country and on Connecticut. UTC said they will keep manufacturing jobs in Connecticut, and I remain focused on the thousands of workers in our state who rely on these jobs to put food on the table.

“I intend to work closely with state government officials, the Department of Justice, and the Department of Defense to ensure this merger does not violates the agreement UTC signed with the state. I remain increasingly concerned about the rapid consolidating within defense and aerospace industry and the impact on competition. Our nation depends on a diverse and competitive industrial base and I intend to review this process closely in the months ahead,” said Murphy.

Comments from both companies on the deal

“Today is an exciting and transformational day for our companies, and one that brings with it tremendous opportunity for our future success. Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world’s most dedicated workforce,” said Tom Kennedy, Raytheon Chairman and CEO. “With our enhanced capabilities, we will deliver value to our customers by anticipating and addressing their most complex challenges, while delivering significant value to shareowners.”

“The combination of United Technologies and Raytheon will define the future of aerospace
and defense,” said Greg Hayes, United Technologies Chairman and CEO. “Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution. By joining forces, we will have unsurpassed technology and expanded R&D capabilities that will allow us to invest through business cycles and address our customers’ highest priorities. Merging our portfolios will also deliver cost and revenue synergies that will create long-term value for our customers and shareowners.”

Officials Detail Why The Merger Was Agreed To

Combination to Create Long-Term Value
• Balanced and diversified aerospace and defense portfolio that is resilient across business cycles: The merger establishes a broad and complementary portfolio of platform-agnostic capabilities across the high-growth segments of aerospace and defense, reducing risk of concentration in any individual platform or program.

• Highly complementary technology and R&D platform: With a combined annual company and customer funded R&D spend of approximately $8 billion, seven technology Centers of Excellence, and over 60,000 engineers, the company will develop new, critical technologies faster and more efficiently than ever before. Areas of joint advancement include, but are not limited to: hypersonics and future missile systems; directed energy weapons; intelligence, surveillance, and reconnaissance (ISR) in contested environments; cyber protection for connected aircraft; next
generation connected airspace; and advanced analytics and artificial intelligence for
commercial aviation.

• Attractive financial profile with strong cash flow generation and balance sheet: Robust free cash flow growth and a strong balance sheet will support continued investment and return of capital to shareowners. 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.

• Complementary company culture: The combined company will have a strong performance-based culture focused on integrity, collaboration, innovation, diversity and corporate social responsibility. Employees will have expanded opportunities for career development and advancement in high-growth areas, as well as ongoing engagement in local communities.