Defense contractor Raytheon is reportedly in advanced talks to merge with United Technologies, according to a report in The Wall Street Journal. The deal could be announced as early as Monday.
Late last year, the WSJ reported that United Technologies was planning to split itself into three separate companies by 2020, selling off Otis Elevators and Carrier divisions in an effort to sharpen its focus in specific industries. These latest merger talks won’t impact those plans, and the paper says that the new company would be worth more than $100 billion, second only to Boeing.
Raytheon is a major US defense contractor that produces an array of products for the military — communication and sensor systems for airplanes and satellites, missile defense systems, semiconductors, and more. United Technologies also produces a wide range of products, from elevators and air conditioners (at least through 2020), as well as aircraft engines for the military (for the F-15 and F-35 fighter jets) and civilian (for Airbus and Gulfstream). Last year, United Technologies bought aviation and defense contractor Rockwell Collins for $30 billion.
If the deal goes through, it would bring together two companies that have extensive experience — but with little overlap with one another — within the defense industry, and would benefit from sharing technology. The increased size of the company could help it weather any downturn in the industry — the WSJ says that analysts predict that the Pentagon will likely to cut back on buying new airplanes, missiles, and other technologies, at least for the next couple of years.