United Technologies Corp. hopes to complete its $120-billion merger with Massachusetts defense giant Raytheon by April, company officials said Tuesday.
Meantime, UTC’s spinoff of subsidiaries Otis Elevator and Carrier Corp., are moving forward as both companies are now operating as independent entities, the company said.
In an earnings call Tuesday morning, UTC CEO and Chairman Greg Hayes said planning for the integration of UTC and Raytheon is well underway, and the goal of completing the deal by early April is subject to regulatory approval.
“We’re already working a detailed list of items to generate the billion dollars of gross cost synergies that we’re targeting for the transaction,” Hayes said of the impending merger. “I also remain very excited about the technology synergies that will result from the combination.”
Hayes wouldn’t elaborate on what those “cost synergies” might entail, but Connecticut political and business leaders will be keeping a close eye on how the deal might impact jobs in the state.
The combined companies will have their headquarters in Massachusetts, which means Connecticut will lose a coveted corporate headquarters.
However, Gov. Ned Lamont said in June that Otis Elevator’s headquarters will remain in Connecticut after its spinoff, and the conglomerate intends to hire 1,000 workers at UTC’s Pratt & Whitney facilities in the state.
UTC had about 19,000 Connecticut employees as of September, according to HBJ’s Book of Lists.
On Tuesday, Hayes said UTC cut Otis and Carrier off from its corporate structure on Jan. 1, and the separations are “substantially complete from an operations standpoint.”
Last month each company announced its future board — Carrier’s eight-member board will be headed by John Faraci, who will serve as executive chairman. Christopher Kearney will lead Otis’ nine-member board as executive chairman.
Both companies are on track to complete the separations by the second quarter, Hayes said. Each will hold pre-spinoff investor meetings next month.
UTC also reported Tuesday that its fourth-quarter profits increased 67% to $1.1 billion, or $1.32 per diluted share, vs. $686 million, or 83 cents per diluted share, in the year-ago period.
Its net sales during the quarter were also up 8% to $19.5 billion compared to $18 billion a year earlier.
UTC’s full-year 2019 profits reached $5.5 billion, or $6.41 per diluted share, a 5% increase from $5.3 billion, or $6.50 per diluted share, in 2018.
Sales at UTC’s divisions varied in the fourth quarter, with Collins posting 31% growth in net sales ($6.4 billion), Otis’ sales up about 1.9% ($3.4 billion), and Pratt & Whitney’s sales flat at $5.6 billion. Carrier’s sales fell 2.8% to $4.5 billion.
On the earnings call Tuesday, UTC CFO Neil Mitchill said Boeing’s anticipated slowdown on production of it’s 737 Max airplane will create some headwinds in 2020’s first quarter. Operating profits at Collins will likely fall by up to $325 million compared with 2019’s first quarter, partially because of the expected slowdown, Mitchill said. Segment profits will probably remain flat.
However, Mitchill said he expects growth in the low single digits for UTC’s aerospace businesses as a whole in the first quarter of 2020.
