Connecticut is not the only one worried about United Technologies Corp.’s proposed megamerger with Massachusetts-based Raytheon Co.
Activist investor Bill Ackman, whose hedge fund Pershing Square owns more than a $700 million, or 0.7 percent, stake in Farmington-based UTC, on Sunday slammed its tie-up with Raytheon in an email to UTC CEO Gregory Hayes.
“We cannot comprehend the strategic logic behind such a transaction,” Ackman wrote, according to the email obtained by the Wall Street Journal. “If the company intends to go forward with such a transaction, we will oppose it, publicly if necessary.”
Ackman, who has supported UTC’s plan to spin off Farmington-based Otis Elevators and Florida-based Carrier building systems as separate companies, said the merger would be “disastrous” for UTC and claimed that the majority of shareholders would also oppose the combination.
While Ackman is the first Wall Street investor to publicly oppose the deal, President Donald Trump on Monday also expressed concern that the all-stock merger, which would create an aerospace and defense powerhouse only surpassed by Boeing Co. in annual sales, would weaken competition.
UTC makes aerospace systems and aircraft engines while Raytheon builds missiles and spy equipment, among other products.
In response, UTC said it’s confident shareholders will see the value in the $121 billion deal.
The merger, the largest this year, would give UTC shareholders 57 percent ownership of the combined company and a majority of board seats. Hayes would also be named CEO of the company.
Raytheon CEO Thomas A. Kennedy, who would serve as executive chairman following the deal, characterized the deal as a “win-win” for both companies as they will mesh their technologies across military and commercial markets, eventually achieving over $1 billion in cost savings in the fourth year of their partnership.
The deal faces several regulatory hurdles before the two companies can officially combine in the first half of 2020, and establish a new headquarters in Greater Boston under the name Raytheon Technologies Corp. It’s not yet clear whether the company would be based at Raytheon’s current headquarters in Waltham, a suburb of Boston, or elsewhere.
UTC, which has approximately 19,000 total employees in Connecticut, this week has repeatedly said it’s committed to the state over the long term despite its plans to move at least 100 high-paying jobs in Farmington to the Boston area.
Hayes said UTC is on pace to hire 10,000 workers this year.
Through conversation with Hayes, Gov. Ned Lamont on Tuesday afternoon said the company has committed to keeping Farmington-based Otis Elevators in state post spin-off in addition to hiring 1,000 workers at East Hartford-based jet-engine maker Pratt & Whitney over the next few years.
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