United Technologies and Raytheon Merger (2020)
Company Details - United Technologies Corporation (UTX)
Founded: 1928
CEO: Gregory J. Hayes (At Time of Merger)
Market Cap: $114bn
United Technologies Corporation (UTC) was a multinational conglomerate specialising in the aerospace industry. UTC’s foundations root to 1928, whereby William E. Boeing formed an American-based aircraft company named ‘Boeing Airplane & Transport Corporation’. A year later, it was renamed as ‘United Aircraft and Transport Corporation’ evolving into a large-scale holding company.
Within the first five years of its operation, the company acquired both airline subsidiaries and aviation manufactures. Following the U.S stock-market crash in 1929, the aviation industry greatly suffered resulting in these large-scale parent companies struggling for profitability. In response to this deflation and concerns surrounding the monopolistic structuring of these holding companies, the U.S passed a legislation known as the ‘Air Mail Act of 1934’. This new legislation forced the separation between airline companies and aviation manufacturers. This caused the complete restructuring of United Aircraft and Transportation into three independent companies: Boeing Airplane Company (holding the western manufacturing subsidiaries), United Airlines (holding the eastern manufacturing subsidiaries) and United Aircraft Corporation (holding all the transportation subsidiaries).
Harry Jack Gray became CEO of United Aircraft Corporation in 1974 and renamed the company ‘United Technologies Corporation’. UTC became the holding company of the Eastern manufacturing subsidiaries: Pratt & Whitney, Chance Vought, Sirosky and Hamilton Standard. Pratt & Whitney specialise in building engines used in military and commercial aircrafts. Their first engine was an air-cooled radial design named the ‘Wasp series’, still considered a landmark in technology from the 1920’s. The ‘Wasp Series’ transformed the aviation industry by providing a more compacted, nine-cylinder engine. These ‘Wasp’ engines enabled a greater power to weight ratio which resulted in a more durable and faster aircraft. There was a surge in demand for these engines in
World War II, whereby more than 360,000 engines were transported for wartime efforts. Pratt & Whitney were the first to release the turbojet engine design (the J57 released in the 1950’s), revolutionising their industry in the manufacturing of aviation engines and propulsion power systems. Pratt & Whitney remains an iconic corporation within the newly merged Raytheon Technologies, with its total revenue for engine and power system manufacturing sales in 2024 being $28.066m.
In 1939, Chance Vought and Sirosky merged to form Vought-Sirosky Aircraft as a subsidiary of UTC. Both companies specialised in carrier-based aircrafts and together created the ‘F4U Cosair’ for the U.S Navy in World War II. This innovative fighter design was the first and most powerful air carrier with their unique ‘gull’ wing, powered by the ‘Double Wasp’ engine by Pratt & Whitney. However in 1954, Chance Vought separated from UTC (at the time named United Airlines) to remedy concerns surrounding its oversaturation within the aviation manufacturing industry. This was due to Chance Vought’s product reliance on Pratt & Whitney, another powerful subsidiary of UTC. Sirosky Aircraft remained a subsidiary of UTC until 2015, when it was acquired by Lockheed Martin for $9bn. Sirosky Aircraft developed the Sirosky S-70 family of helicopters, used by civilians and the U.S military. These civilian helicopters can be used by firefighters for rescue missions or for medical evacuation duties. UTC sold this subsidiary to re-direct their focus into the aerospace industry, ahead of their planned Rockwell Collins acquisition to form Collins Aerospace in 2017.
Hamilton Standard Corporation merged with Standard Steel Propeller Company in 1929 and quickly became a leading manufacturer for aircraft propellers. After their great efforts in World War II (whereby they supplied over 500,000 aircraft propellers to the U.S military and Navy), they expanded their industrial reach and began development on: aircraft fuel controls, satellite controls, life-support systems, space shuttles and space suits. These space systems/components were featured in the Apollo Command Module and the Apollo Lunar Module. The systems (including the space suits) were key components of the U.S Apollo spacecrafts which were used for moon landings, including the famous Apollo 11. UTC acquired Sundstrand Corporation in 1999, who specialised in aerospace and industrial products, such as power systems (aerospace and electric) and gas turbine engines. Through UTC’s $4.3bn acquisition of Sundstrand Corporation, it then merged with Hamilton Standard to create UTC’s new subsidiary, Hamilton Sundstrand Corporation. Integrating these two companies allowed UTC to expand their reach within the aerospace sector.
Hamilton Sundstrand later became Collins Aerospace in 2017, a result of two separate mergers made by UTC. Firstly, the $18.4bn merger with Goodrich Corporation in 2012 formed United Technologies Aerospace. Goodrich Corporation specialised in: aeronautical systems, brakes, landing gears and sensory features. This merger complimented the powerful aerospace systems built by the subsidiary Hamilton Sundstrand, allowing UTC to expand their industrial reach within the manufacturing industry of aircrafts and spacecrafts. United Technologies Aerospace became Collins Aerospace in 2017 after UTC’s acquisition of Rockwell Collins, specialising in both commercial and military avionic systems for all types of aircrafts. The $30bn acquisition of Rockwell Collins was to strengthen UTC’s supply of the avionic networks and communication systems, within its manufactured aircrafts. As of today, Collins Aerospace delivers advanced technological communication systems for nearly every commercial airline globally and transmits military communications throughout the U.S..
Ahead of UTC’s ultimate merger with Raytheon, it separated from two of its core subsidiaries named Otis Worldwide and Carrier Global. The separation was to increase customer focus and value creation in both companies, in each industry. The Otis Elevator Company was originally acquired in 1976 and specialised in vertical transportation systems (e.g lifts, escalators and moving walkways). Otis Elevator was the first manufacturer of the ‘Otis Elevonic’, an elevator which used a microprocessor within its transportation system to reach levels in mid-rise buildings. The Elevonic E401 was the first high-rise gearless lift and was distributed globally. Otis Worldwide initially diversified UTC’s industrial reach and allowed UTC to grow its relationships as a global building-system manufacturer.
Carrier Global was one of UTC’s core businesses, after its acquisition in 1979. The company was founded by Willis Carrier, the inventor of air-conditioning units. Carrier Global specialises in: heating, ventilation, air condition systems (HVAC) and refrigeration. In 1902, Carrier Global was labelled as the world’s largest HVAC systems and refrigeration manufacturers. UTC had initially incorporated Carrier Global to diversify its industrial reach and commercial expansion within the U.S markets.
Company Details - Raytheon Company
Founded: 1922
CEO: Thomas A. Kennedy (At Time of Merger)
Market Cap: $52bn
The Raytheon company was founded by three scientist engineers: Vannevar Bush (scientist and professor), Laurence K. Marshall (engineer and physicist) and Charles G. Smith (scientist). The founders were initially focussed on new refrigeration technology, being the first to create a gaseous rectifier. Their helium-based rectifier was marketed under the brand name, establishing their reputation within the industry through its commercial success. The ‘Raytheon’ was a helium-based electron tube, located in battery eliminators (a radio-receiver power supply) and then connected to a larger power grid. The ‘Raytheon’ succeeded by developing a gaseous rectifier that efficiently transferred direct high voltage current through circuits, offering a cheaper and more effective alternative to short-life batteries.
To strengthen Raytheon’s commercial strategy, it merged with the Q.R.S Company who specialised in the manufacturing of electron tubes and switches. After the merger with the Q.R.S Company in 1928, Raytheon renamed itself as ‘Raytheon Manufacturing Company’ and was announced as one of the world’s largest vacuum tube manufacturing companies. This allowed the company to showcase its direct focus within the industry and accelerate on its strengths.
In 1933, Raytheon acquired the Acme-Delta Company who specialised in: transformers, power equipment and electronic auto-parts. This acquisition allowed Raytheon’s primary focus on electron tubes to be transferred into the development of electronics. This successfully resulted in Raytheon being able to develop radar systems using the ‘magnetron’, which later became a crucial U.S radar defence system. Magnetrons are specialised microwave radiation electron tubes, initially invented by the U.K. During World War II, Raytheon supplied around 80% of U.S. radar devices and played a key role in supporting Britain’s large-scale military operations. Raytheon developed a microwave tube 100 times more powerful than previous versions and advanced detection systems. Owing to their commercial success, Raytheon produced ground-based, airborne, and shipborne radar systems used to detect enemy aircraft and submarines, serving as a vital defence mechanism.
Throughout the 1940’s, Raytheon continued to grow, particularly with the development of its high-tech military defence systems. Raytheon began shifting their focus primarily onto electronics, after their multiple acquisitions of electronic companies: Belmont Electronics for $4.6m, Russel Electric for $1.1m and the Submarine Signal Company. After the sudden outbreak of the Korean war, Raytheon made history with the ‘Lark’ missile. The ‘Lark’ missile was the first missile to destroy target aircrafts in flight and carried a guidance system designed by Raytheon. Following these military successes, Raytheon was assigned the development of the $125k ‘Sparrow’ (air to air) missile and the $250k ‘Hawk’ (surface to air) missile. The Raytheon company ultimately became a leading manufacturer in the supply of defence weapons and military electronics to the U.S military and intelligence systems.
Raytheon’s extensive research and experience into electromagnetic microwave radiation, consequently resulted in their invention of the microwave oven. In 1967, Raytheon had great commercial success in the distribution of household microwave ovens. Their strengths within the capabilities of electron tubing, allowed Raytheon to discover the relationship between microwave radiation used in large-scale operations (by the military and governments as defence systems) and the fast heating of food on a domestic scale.
Motivations For The Merger
In June 2019, UTC first announced their plan for the merger with Raytheon to create an industry leading Aerospace and Defence company. Strategically, this merger allowed both strong manufacturers, who operated in different sectors of the overarching Aerospace and Defence industry, to collaborate as one, strengthening their high-tech engineering. Furthermore, both businesses had a worldwide customer base, and were mainstream suppliers to government and military services. Conjoining into one large enterprise, would allow for them to equally diversify each of their large-scale operations and share their strengths in the overlapping industries. It was believed this would form a stronger financial profile, enabling more research and development to be done around their complex systems, in order to provide their clients with state-of-the-art services.
Whilst both companies had strong financial margins at the time of the merger, UTC had previously acquired Rockwell Collins for $30bn in 2017 and had recently let go of two of its core subsidiaries (Otis Worldwide and Carrier Global). Therefore, UTC faced some pressure surrounding their financial stability due to its recent restructuring and re alignment into the aerospace/defence industry. UTC needed to gain financial stability and increase its profitability, in order to keep up with the fast-paced development of new technologies and maintain a leading position in its industry. Raytheon had a strong financial profile and would support UTC’s re-alignment within the industry, whilst aiding in the development of innovative technologies.
Legal Contentions
The contentious legal work involved, consisted of the U.S Department of Defence and the Department of Justice agreeing on the requirement of the divestures in: UTC’s global positioning system (GPS) business, UTC’s optical systems business, and Raytheon to divest their military airborne radio business. The disposal of these business units were required to control the future of ‘Raytheon Technologies’’ market power, to ensure fair competition within the sensitive industry. The Department of Defence harboured both horizontal and vertical concerns. Horizontal concerns are the worries surrounding the integration of companies operating at the same market level (e.g products, manufacturing and purchasing) and who could be considered direct competitors of each other. Conversely, vertical concerns are worries surrounding the integration of companies who are not considered at the same market level (e.g differences in: products, manufacturing and purchasing) and who are not directly in competition with each other.
Horizontal concerns for the Department of Defence surrounded the manufacturing of both companies’ airborne radios, used within military (Air Force and Navy) aircrafts. These concerns also lay with the military GPS systems produced by UTC and Raytheon for their aviation and maritime systems. For the GPS ground-based systems used, UTC and Raytheon were two out of three major competitors to supply these products, despite the Department of Defence in 2012 beginning their independent development of new military GPS systems. The horizontal concerns raised by the proposed merger, would nearly eliminate competition for the production of these high-tech and complex systems. Eliminating competition between the two, would result in an increase in costs for their customers and likely a decrease in the innovation of the products entirely.
Vertical concerns for the Department of Defence surrounded the leading production of UTC’s optical systems and Raytheon’s focal plane array (FPA) detectors. The FPA’s are key instruments for the completion of the electro-optical/infrared reconnaissance satellites. The market power ‘Raytheon Technologies’ would hold over these systems and their components, would potentially leave competitors forced to purchase higher component prices or comply with strong contractual terms concerning both products. Outside of the U.S, the European Commission too raised their concerns surrounding the proposed merger. Due to the sensitive nature of the industry, UTC and Raytheon were amongst the small number of high-tech corporations which supplied military GPSs globally. The European Economic Area who purchases military aviation from U.S companies, claimed that the merger would result in them facing the increase in costs and a market saturation. These concerns reinforced the problematic issues which all consumers and suppliers would be faced with. Customers would be forced to purchase products at higher prices due to their market dominance. Competing suppliers would also face higher costs due to their reliance on the manufacturing of components needed for new systems, of which the merger would have full control over.
The Merger
The merger was finalised in April 2020, establishing the new Raytheon Technologies Corporation (RTX). This transaction was an all-stock merger of equals, allowing both companies shared control over the new entity formed. It was agreed that UTC shareowners would own 57% of the new company, leaving Raytheon shareowners with the remaining 43%. The integration followed UTC’s separation from Otis Worldwide and Carrier Global to boost innovation and grant each company greater financial flexibility. This independence enabled Carrier to focus on sustainable HVAC solutions amid rising climate concerns, while Otis invested 42% more into modernising its equipment. After UTC’s spin-off from these core businesses, it re-aligned its focus to the aerospace industry with its subsidiaries Pratt & Whitney and Collins Aerospace. The annual gross cost in synergies after the RTX’s fourth year operating is expected to reach over $1bn. The reduced costs due to the integrated operations has helped to improve the overall success of the new enterprise.
To remedy the antitrust and competition concerns surrounding the integration of both companies, both UTC and Raytheon agreed to the disinvestment of certain branches of their corporations. UTC agreed to divest their entire military GPS sector, including their key technologies and workforce to BAE systems. BAE systems is a British multinational leading defence company, approved as a buyer by the U.S.. BAE systems acquired UTC’s GPS business in July 2020, for a deal of $1.9bn. Moreover, UTC were also required to divest Danbury unit of its optical satellite systems business, based in Connecticut. The financial profile of the deal remains uninformed, but the intention was to protect national aerospace security. However, UTC were allowed to remain in possession of all their non-military optical systems and after the merger would still have access to all of Raytheon’s optical systems. Raytheon were mandated to divest their airborne tactical radio business and their military radios found in U.S army helicopters. BAE systems also acquired Raytheon’s military radio business in July 2020 for $275m, totalling these acquisitions by BAE systems for this unique merger to around $2bn.
The Future
This deal remains the largest merger within the aerospace industry, with the total merger equalling $121bn. RTX is now the largest aerospace and defence company with over 185,00 employees across the globe. As of today, the market cap of this amalgamation has reached an outstanding $200+bn (August 2025). Recent news concerns RTX’s Raytheon signing of an MEO (memorandum of understanding), to co produce stinger missiles with Diehl defence and are used by 24 countries. This showcases RTX’s consistent priority in supplying high-tech products to their global consumers, remaining an industry leading corporation.