Merger #2

Defense icons Raytheon and United Tech merge into an aerospace beast

Tuesday, June 11, 2019 by Snacks

Those kid-sized army toys... Raytheon and United Technologies make real sized ones for real armies. The New England-based defense companies announced a merger Monday — The US government hasn't approved it yet, but the PR teams seem confident it will (they just launched FutureOfAerospaceDefense.com to promote the deal). It'll be called "Raytheon Technologies," and build for the front lines and the homefront:

  • Raytheon (defense): Its Tomahawk cruise missiles are launched straight off US Navy ships.
  • United Technologies (aerospace): Its engines power the stealthy F-35 fighter jets.
  • Inventions that eventually get into your kitchen & car: It turns out United invented the microwave, and Raytheon sent the first ever photo via satellite.

There's 1 customer here... The government. Over 80% of Raytheon's revenues came from contracts with US and foreign governments — Its Patriot missile system is used by 9 nations. Raytheon and United hope teaming up will help it win more of the $398B governments dropped on weapons in 2017 (a 3rd straight annual increase).

THE TAKEAWAY

We're looking at you, Boeing... The leader of the aerospace industry has $101B in annual revenue. This Raytheon-United merger will result in $74B in combined sales, making it #2 behind Boeing (Lockheed Martin would be distant #3). This could be the big rival Boeing needed to keep it honest and competitive in bids for things like the $900M Growler Jet order it won last year. No typo — this merger could boost competition.

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