In a surprise announcement, Farmington-based United Technologies said Sunday evening it’s merging with another aerospace giant, Raytheon. The combined company's headquarters will be in Raytheon's home state of Massachusetts, marking the seismic loss of a homegrown giant for Connecticut.
After the all-stock deal, UTC shareholders will own 57 percent of the new entity -- but the United Technologies name will disappear. The new company will be known as Raytheon Technologies Corporation. The merger will happen after UTC has spun out its non-aerospace companies -- Carrier Air Conditioning and Otis Elevator, a move that’s already well underway.
The combined company will be one of the biggest aerospace corporations in the world and will have annual revenues of around $74 billion.
While the new company will have its headquarters in the Boston area, it's not yet clear exactly what the deal will mean for UTC's huge Connecticut workforce. UTC currently employs around 19,000 people in the Nutmeg State, including at major manufacturing sites for jet engine maker Pratt & Whitney.
In a conference call Monday on the news, United Technologies CEO Greg Hayes addressed this question.
“We want to emphasize, particularly for the benefit of United Technologies employees, this does not mean that we’re exiting operations in Connecticut, and moving to Boston," said Hayes. "In fact, Raytheon Technologies will maintain a strong presence in Connecticut for years to come.”
He also spoke about the rationale for the merger, saying it will define the future of the aerospace and defense industry.
"This merger's going to bring together two leading companies with unsurpassed technological capabilities, both for today and into the future," said Hayes. "As a combined company we will deliver intelligent, innovative and cost-effective solutions across the full spectrum of aerospace and defense needs."
But the news is a blow to Connecticut's status as a home for one of the world's most successful Fortune 500 companies. Governor Ned Lamont tried to sound an upbeat note in his own press statement.
“UTC and its subsidiaries, including Pratt & Whitney, Otis Elevator, and Collins Aerospace, continue to be an important part of Connecticut’s fabric," said Lamont. "It’s important to note that nearly all of UTC’s 19,000 employees will remain in Connecticut, with roughly 100 moving to the new headquarters. I’ve spoken directly with Greg Hayes and made it clear that Connecticut will always be open should things change, as they often do. This serves as reminder that we live in an increasingly competitive economy, domestically and internationally."
First District Representative John Larson, whose district includes Pratt & Whitney's East Hartford headquarters, said he's been reassured by UTC that its manufacturing base will remain strong in Connecticut.
"As we await more information, our number one concern is UTC employees," said Larson in a statement. "We will be reaching out to them, as they are understandably anxious about what effects this will have on the workforce, and will do anything we can to support them.”
The deal attracted the attention of President Donald Trump who said in an interview with CNBC that he's concerned about anti-trust issues, as the combination creates the second biggest aerospace company in the U.S.
“When I hear they’re merging, does that take away more competition?" said Trump. "It becomes one big, fat, beautiful company, but I have to negotiate, meaning the United States has to buy things, and does that make it less competitive?”
But most analysts don't see that as a concern. Richard Aboulafia of the Teal Group said Raytheon is best known for missile systems and defense-related cybersecurity products.
“Compared to the commercial jetliner and other civil aircraft component maker that UTC has become, this is really just a completely different animal,” Aboulafia told Connecticut Public Radio.
And he said the merger of such distinct businesses should also be good news for the Connecticut workforce.
“Because this is such a clean merger, with really no overlap that I can see -- you’ve got completely different business units -- everything else should stay exactly intact," said Aboulafia. "There’s absolutely no reason to move Pratt & Whitney and all the other component businesses anywhere.”
This story has been updated.