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Raytheon share price up 2% after merger with United Technologies

The defence contractor's stock rises after announcing a merger with conglomerate United Technologies.

Raytheon share price is slightly growing after announcing a merger with United Technologies. The $121 billion merger of the companies would make the newly formed corporation, Raytheon Technologies, the second-largest aerospace company after Boeing.

Raytheon-United Technologies merger details

United Technologies is a conglomerate that creates equipment like aircraft electronics. Raytheon is a defence contractor that provides military aircraft to the US government. Under the merger agreement, United Technologies stockholders will own 57% of Raytheon Technologies and Raytheon shareholders will own the rest of the new company.

United Technologies chief executive officer (CEO), Greg Hayes, spoke in a statement about the merger.

‘The combination of United Technologies and Raytheon will define the future of aerospace and defence,’ said Hayes.

‘By joining forces, we will have unsurpassed technology and expanded R&D [research and development] capabilities. Merging our portfolios will also deliver cost and revenue synergies that will create long-term value for our customers and shareowners,’ added Hayes.

Raytheon chief executive officer (CEO), Tom Kennedy, also touted the merger with United Technologies.

‘Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defence portfolio supported by the world's most dedicated workforce,’ said Kennedy.

Reaction to Raytheon-United Technologies merger

US President, Donald Trump, expressed concerns with the union of the two companies. Because both corporations would make products for the US Defence Department, Trump believes that there could be less competition if the US wants to negotiate with other aerospace businesses to purchase planes if the merger is completed.

‘I hope the Raytheon deal, I hope it can happen. But I don't want to see where we have one less person that can compete for an order [for aeroplanes],’ said Trump.

The Raytheon-United Technologies merger still has to be approved by the US Justice Department and US Federal Trade Commission. The deal is expected to be completed in early 2020.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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