Assuming its proposed tie-up with Raytheon Co. wins necessary approvals, United Technologies Corp. is ready to settle in for the foreseeable future, CEO and chairman Gregory Hayes said Monday.
Just over a week after announcing the historic combination of UTC and Raytheon, Hayes told analysts Monday at the annual Paris Air Show that the 85-year-old Farmington conglomerate is “pretty much done” making big acquisitions as it looks to become an aerospace and defense powerhouse based in Greater Boston.
“The puzzle is now complete,” Hayes said during a Q&A discussion with Raytheon CEO Thomas A. Kennedy, which the two companies streamed online. “We don’t need any other big M&A to fill out the portfolio.”
Hayes and Kennedy for the second time in a week spent the morning explaining the benefits of the proposed tie-up to skeptical investors and analysts, claiming their combined technologies would set the renamed Raytheon Technologies Corp. business far ahead of its competitors in the booming aerospace industry.
“Look, I know it caught everybody by surprise, but at the end of the day as you step back and think about what was the next logical step for the UTC aerospace business, it was exactly this,” said Hayes, who would serve as CEO of the new company.
“Once we started the discussions, it became really apparent to me that the technology advantage that the two companies could have together far outweighed any other considerations in terms of bringing these two great businesses together. Raytheon has been on our radar for about 10 years,” he continued.
Hayes said the deal, merging two companies with combined annual revenues of about $74 billion, comes from a position of strength and will advance UTC’s defense business. Only about a quarter of UTC’s business was in defense prior to its $30 billion acquisition of Iowa-based aviation systems maker Rockwell Collins last November.
“The only way that we could be successful in the long run is to have the scale and technology of these two great companies coming together,” he said. “This is a transaction that gives us unprecedented scale. We get the company jewels.”
The two chief executives, who began discussing a potential megadeal almost a year ago, said they’re bullish on the federal government’s continued support for defense, after traveling to Washington, D.C., last week to talk with White House officials and members of the U.S. House and Senate.
Kennedy, slated to become executive chairman of the combined company, said employees appear to support the deal.
“There is a group that’s pretty upset with us, and that’s our competitors,” he said. “Normally, when your competitors are upset with you, that’s actually a good sign.”
Kennedy and Hayes didn’t, however, make mention during the Q&A of another potential loser in their proposed merger: Connecticut.
State lawmakers from either side of the aisle last week made their own claims about why UTC, Connecticut’s largest employer, decided to move its headquarters and 100 high-paying jobs from Farmington to the Boston area sometime next year.
Several Democrats downplayed the impact of UTC’s impending move, stating the merger will actually add jobs in Connecticut over time. Meantime, Republicans said the relocation was another example of a big business turning its back on an expensive state with minimal economic growth.
Meanwhile, Hayes in an interview on Fox Business said UTC’s out-of-state move was a part of a compromise with Raytheon, and said he is encouraged Connecticut is getting its “fiscal house in order.”
Separation update
Also on Monday, Hayes said UTC remains on pace to spin off its Farmington-based Otis Elevators and Florida-based Carrier building systems businesses as independent companies by March 31, 2020, and no later than June 2020.
Hayes, who took over as UTC’s CEO in Nov. 2014, said approximately 630 people are working to get the companies prepared to operate independently by year-end.
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