$121bn Raytheon and United Technologies Merger Concerns President Trump

Posted on June 11, 2019

A soon as the firms confirmed the plan the US president voiced caution. The US spends hundreds of billions of dollars each year with defence firms. Analysts say a merger of UTC, whose divisions include the aero-engine maker Pratt & Whitney, and Raytheon, maker of the Tomahawk and the Patriot missile systems, would be likely to re-shape the defence sector as other firms look to consolidate.
But Mr Trump said the merger could harm competition and make it more difficult for the US government to negotiate defence contracts. “I want to see that we don’t hurt our competition,” he said in an interview with US broadcaster CNBC.

Mr Trump praised both companies and said he hoped a deal can be done, but warned: “I don’t want to see where we have one less person that can compete for an order. I don’t want to see that. It’s no good.” UTC chief executive Greg Hayes, when asked about the comments, said he would talk to the president later on Monday.
Although the two companies have some customers in common, they argue that their business overlap is limited. The deal faces detailed scrutiny from US competition regulators that will take months.

Part of the rationale for the deal is the huge investment needed to develop next-generation equipment such as weapons which fly faster than the speed of sound and incorporating artificial intelligence into defence systems.
The merger “will define the future of aerospace and defence,” Mr Hayes said. The companies employ about 180,000 worldwide.
JP Morgan analyst Seth Seifman said news of the merger was “a surprise, but we see real rationales on both sides in scale, diversification in the face of cyclical uncertainty, and financial benefits”.

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