WASHINGTON — The merger between two defense giants got the green light from the U.S. Department of Justice, under the condition that divestitures already in the works move forward and another piece of business is shed.
According to a March 26 announcement from the DOJ, United Technologies Corp. and Raytheon will need to divest Raytheon’s military airborne radios business as well as UTC’s military global positioning systems and large space-based optical systems businesses in order to proceed with the proposed merger.
The divestitures would satisfy a proposed settlement from the department’s Antitrust Division of a civil antitrust lawsuit to block the proposed Raytheon-UTC merger.
BAE Systems agreed in January to buy Collins Aerospace’s military global positioning system business — which is owned by parent firm UTC — for $1.93 billion and Raytheon’s airborne tactical radios business for $275 million.
“Today’s settlement protects the American taxpayer by preserving competition that leads to lower costs and higher innovation in critical military and defense products,” said Assistant Attorney General Makan Delrahim of the Antitrust Division. “The merger, as originally proposed, would have eliminated competition in the supply of military airborne radios and military GPS systems, and would have positioned the merged firm to harm rivals capable of making key components for reconnaissance satellites. These horizontal and vertical concerns are resolved by the Division’s structural remedy, which includes the divestiture of three separate business units.”
Under the terms of the proposed settlement, the companies need to divest Raytheon’s military airborne radios business, including facilities in Fort Wayne, Indiana, and Largo, Florida; as well as UTC’s military GPS business to BAE Systems or another approved acquirer.
The proposed settlement would also require the divestiture of UTC’s optical systems business, including a facility in Danbury, Connecticut, to an approved acquirer.
Raytheon and UTC announced in June 2019 plans to officially merge into a new entity called Raytheon Technologies Corporation, with the deal at the time expected to close during the first half of 2020.
Jill Aitoro is editor of Defense News. She is also executive editor of Sightline Media's Business-to-Government group, including Defense News, C4ISRNET, Federal Times and Fifth Domain. She brings over 15 years’ experience in editing and reporting on defense and federal programs, policy, procurement, and technology.