What the Raytheon, United Technologies Merger Means for Aerospace and Defense
The Raytheon-United Technologies merger that was finalized early last month will create the largest aerospace and defense conglomerate the world has seen: Raytheon Technologies Corporation.
No fewer than four business units will come together as a part of the merger:
- From United Technologies comes the jet engine maker Pratt & Whitney, whose sales totaled $21 billion in 2019, and Collins Aerospace, the aerospace parts maker whose sales totaled $22 billion in 2019.
- From Raytheon comes its intelligence, space and airborne systems unit, which totaled $18 billion in sales in 2019, and its integrated defense and missile systems unit, which raked in $16 billion in 2018.
It’s not just about size
The goliath will have 60,000 employees and spend an estimated $8 billion annually on research and development alone. But what makes the merger so significant isn’t just the size of the deal.
It’s the blending of the worlds of aerospace and defense into one entity, which is unique. Propulsion systems and air traffic management systems will be made by the same company building missile systems and state-of-the-art surveillance systems.
So why merge?
According to Raytheon Technologies Corp, the merger will result in “$1 billion of gross annual cost synergies by year four” as a result of the combined entities’ complementary portfolios. Its “unsurpassed technology and expanded R&D capabilities” will “deliver innovative and cost-effective solutions aligned with customer priorities.”
It’s a vertically aligned organization — just like Aerospace Manufacturing – AMI!
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