Posted on 06/09/2019 9:25:18 AM PDT by Innovative
The deal could be announced in coming days and won’t affect planned spinoffs at United Technologies.
United Technologies Corp. is near a deal to combine with military contractor Raytheon Co., according to people familiar with the matter, the latest move by the sprawling conglomerate to transform into a company focused on aerospace and defense.
The companies, which together have a market value of roughly $166 billion, could announce a deal in the coming days assuming talks don’t fall apart at the last minute, the person said.
(Excerpt) Read more at wsj.com ...
When all those defense companies were allowed to merge in the 90’s it meant less competition and innovation. This will just make it worse,
Good for the shareholders, you mean. What are euphemistically called “synergies” in the M&A world..i.e. combined functions to eliminate redundant functions and fewer people means less G&A, higher op profit.
I can't find that video anywhere else on the internet.
Didn’t work well in Russia since the defence contractors consolidated by branches. MIC was probably a single ‘capitalist’ part of Soviet economy with a great deal of competition between design buros and production facilities.
Now they have behemoths like United Aircraft Corporation or Tactical Missile Corporation or All-national Shipbuilding company which bought or starved all competition.
On one hand many of them are publicly traded and everyone can get something off it but the most evident result is their products are now priced on par with Western designs but not necessarily comparable by capabilities. And that is not even the shortest end the military has from it. Not only the military don’t have effective tools to argue prices at such environment they don’t really have that much a say on designs they get. It is mostly decided by producers themselves and politicians.
They say “merge” but UT is about 4 times the size of Raytheon so I think merge may be misleading (at least to me).
Odd that UTC just sold Sikorsky Aircraft (UH-60 Black Hawk/SH-60 Seahawk and CH-53 helicopters) to Lockheed four years ago.
So they subtract their 2nd-largest defense company in their portfolio because they want to focus on defense?
Doesn't add up.
There is no comparison between the two companies, Hughes was a great company that did a great deal for the country. Raytheon on the other hand, has always put corporate interests first.
The finance companies made a killing convincing all of the defense companies to use their profits to buy back stocks rather than invest in R&D for the future.
Now that bubble has burst, so they have to come up with some other way to make fees: consolidation to take advantage of 'synergies'.
When that bubble bursts they'll find yet another way: spin-offs to allow the separate units to 'focus on their core competencies'.
Rinse and repeat.
At first blush it *looks* like a bad idea - as others have noted consolidation, less competition... But when you look into what the two companies actually provide there is virtually no overlap. So if you're the DoD looking to buy an X-widget, it might be in either Raytheon's or UT's wheelhouse, but not both. So merging the two means it doesn't take away options. It's not like Raytheon or UT are the only two providers of the X-widget, and after the merger the new company will have a monopoly. In many ways the merger might enhance competition - creating another company that can actually go toe-to-toe with Boeing, Lockheed, Northrop, etc. on more contracts.
On the other hand, I don't buy that it is as rosy as some people have been making out either. I've already read "...creating one stop shopping for customers..." Well, that seems a bit of a stretch. Even combined, the two companies don't really have complete solutions for many things. It's not likely a customer is going to need a jet engine and a radar. Now, they may need them as part of some program but... "One stop shopping" seems a bit like marketing hype. It will give them a bigger portfolio of products and services to offer - they can take on more of a program, or be a bigger/badder/better partner for a complete contract. It will also give the resulting company broader scope and deeper pockets - making it much more resilient against temporary slumps in one market segment or another.
I'm taking a wait and see attitude. If/when it eventually happens, which will probably take the better part of a year, then it'll take another year or two to see how well the company is working...
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