The United Technologies and Raytheon Merger will be the Biggest in the

A United Technologies Corp. sign stands outside the Carrier Corp. facility in Indianapolis Indiana U.S. on Thursday Dec. 1 2016

"Under Secretary of Defense for Acquisition and Sustainment Ellen Lord is engaging with industry leadership to understand the implications and governance as a result of this acquisition", the statement said.

President Trump has poured cold water on a $120 billion merger between United Technologies and Raytheon by suggesting that the deal could make it harder for the Pentagon to negotiate weapons contracts.

But the proposed merger is not expected to affect plans by United Technologies to streamline by spinning off its Otis elevator and Carrier building-systems business into separate companies, expected to happen next year. "Raytheon Technologies will continue a legacy of innovation with an expanded aerospace and defense portfolio supported by the world's most dedicated workforce", said Raytheon Chairman and CEO Tom Kennedy. Only Boeing, with annual sales of $101bn, and Airbus, at $74bn, would be bigger.

President Donald Trump expressed some concern about the latest merger on Monday morning. United Tech's shares were down about 2 per cent at US$129.40, while Raytheon's stock was up 1.7 per cent at US$189.2 in morning USA trade. Trump said in an interview on CNBC.

Trump said competition already has been diminished among defense contractors.

The defense contractor Raytheon - now headquartered in Waltham, Massachusetts - was originally founded in Cambridge in 1922.

"The rationale seems to address (United Technologies') needs more than Raytheon's, unless this was also about simply finding the best partner in a consolidating space", wrote Joseph DeNardi, a defense analyst with Stifel. Their merger would create a one-stop shop that produces and sells everything from radar systems to fighter and passenger planes, a market dominance that could make many big players like Lockheed Martin, Boeing, and General Electric nervous. Two years following the close of the transaction, Hayes will assume the role of Chairman and CEO. And Raythen and United have a combined annual company and customer funded R&D spend of about $8 billion, 7 technology Centers of Excellence, and over 60,000 engineers.

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The headquarters of the new merged company, called Raytheon Technologies, would be in the greater Boston area.

The net debt of the combined company at the time of closing is expected to be about $26 billion with United Technologies expecting to contribute approximately $24 billion.

The deal faces detailed scrutiny from U.S. competition regulators.

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

With this in mind, aerospace firms Raytheon Co. and United Technologies Corp. are joining an ever-growing horde of defense firms that are undertaking mergers or acquisitions to gain heft in an industry that is becoming increasingly consolidated.

"We don't expect DoD to raise strong objections to the deal", though there may be small divestitures where there's overlap with businesses picked up with the Rockwell Collins purchase, analyst Byron Callan of Capital Alpha Partners wrote in a note Sunday.

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