UTC and Raytheon announced they had agreed an all-stock merger earlier this month. The deal, which the two companies called a “merger of equals,” would bring together a booming aerospace company with a giant government defense contractor.
It is expected to close in the first half of 2020.
However, the proposal has raised questions among regulators and shareholders about the economic benefits and costs of large mergers.
“If you think about the regulatory landscape, which is the first question in terms of the timing, there is zero overlap,” Greg Hayes, CEO of UTC told CNBC’s Phil LeBeau at the Paris Airshow on Monday.
“From a regulatory standpoint, we think nine months at the outsight to get this done. Ten countries, it does not require Chinese approval, so we think we have got a pretty clear path,” Hayes said.
Raytheon has been ‘on our radar for a long time’
President Donald Trump told CNBC in an exclusive interview last week that he was a “little concerned” the proposed deal could harm competition and make it more difficult for the U.S. government to negotiate defense contracts.
Raytheon and UTC have both since dismissed concerns about a possible reduction in competition, saying they have very little overlap that would generally spark concern among anti-trust regulators.
“As far as objections from shareholders, I think, again, the more we talk about technology, the more they see the benefits, the easier this is going to be to convince people,” Hayes said.
The new company, to be called Raytheon Technologies, would become the second-largest aerospace and defense company in the U.S. after Boeing with an estimated $74 billion in sales.
Raytheon International CEO John Harris told CNBC Monday that he could not remember a time when the two companies were competing over the past 35 years.
United Technologies Chairman and CEO Greg Hayes.
Brendan McDermid | Reuters
Harris also said he did not see the Raytheon and UTC deal as an indication of more mergers in the aerospace industry.
“As we have talked to the customers, as we have talked to the Department of Defense, they have been very intrigued by the opportunities that the merger gives,” UTC’s Hayes said.
“Obviously, investors were a little bit surprised. I tell people, look, this is the final piece of the puzzle for UTC in terms of our journey from a conglomerate multi industry to a focused A&D (aerospace and defense) company.”
“I was joking with the folks at Raytheon that they have been on our radar for a long time. Of course, they are the preeminent company in the world,” he added.