Raytheon, one of the U.S. government’s largest military contractors, and United Technologies Corp. (UTC), an aerospace design and manufacturing company that also has strong military ties, are combining in an all-stock merger that promises to create a leviathan of military technology and equipment valued at $100 billion.
President Donald Trump sounded a skeptical note about the deal on CNBC on Monday, saying he was “a little concerned” that it could harm competition. Raytheon CEO Tom Kennedy countered that the companies are “complementary, not competitive.” (Kennedy will serve as executive chairman of the merged company, with current UTC leader Greg Hayes at the helm as CEO.)
Wachtell, Lipton, Rosen & Katz advised UTC on the deal, fielding a team led by 87-year-old firm co-founder Martin Lipton and corporate partners Joshua Cammaker, Edward Lee and Victor Goldfeld. Also on the deal are tax partner T. Eiko Stange, compensation and benefits partner Jeannemarie O’Brien and antitrust partner Damian Didden. Crowell & Moring served as lead U.S. antitrust counsel to UTC, led by partner Shawn Johnson and includes counsel Lauren Patterson and Martin J. Mackowski.
Raytheon turned to a Shearman & Sterling team led by M&A partners Clare O’Brien, Sean Skiffington and Cody Wright, along with compensation and benefits partner John Cannon, tax partner Laurence Bambino, antitrust partners David Higbee and Matthew Readings, litigation partners Alan Goudiss and Mallory Brennan, and IP transactions partner Jordan Altman.
The deal, which the companies described in Sunday’s announcement as a merger of equals that would bring $18 billion to $20 billion to shareholders, will be finalized in the first half of 2020, after UTC completes a proposed split into three separate entities. The company is spinning off its elevator (Otis) and building manufacturing (Carrier) arms.
According to the companies’ release, United Technologies share owners will own approximately 57 percent and Raytheon share owners will own approximately 43 percent of the combined company on a fully diluted basis.
The Shearman team had a previous relationship with Raytheon dating back to 2005, but the UTC merger dwarfs its past deals.
“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,” Kennedy said in a statement.
The combined company’s headquarters are expected to be in the Boston area, where Raytheon is now based, in Waltham, Massachusetts. UTC, based in Farmington, Connecticut, is that state’s largest private employer.