Raytheon’s Finance Chief Sees Path Clearing for Megamerger

(Bloomberg) -- Raytheon Co.’s finance chief sees the finish line approaching as the defense giant works through the final stages of its blockbuster merger with United Technologies Corp.

The companies already have begun early integration planning, said Raytheon Chief Financial Officer Toby O’Brien, as they seek regulatory approvals. The pair also are considering small divestitures that may be necessary, he said.

“We don’t see any impediments there that would disrupt the plan to close the merger in the first half next year,” O’Brien said Thursday in an interview after Raytheon reported third-quarter earnings.

The comments, coming days after United Technologies said the combination is on track, paint a bright picture for a deal that had faced questions after it was announced in June. Shareholders for both companies approved the tie-up this month, and investor Pershing Square Capital Management, which had opposed the merger, sold its United Technologies shares recently rather than fight.

Raytheon rose 2.6% to $208.90 a share at 9:52 a.m. Thursday in New York after the company boosted its sales and profit forecasts for the year. The Waltham, Massachusetts-based company said third-quarter earnings from continuing operations rose to $3.08 a share, topping the $2.86 average of analysts’ estimates compiled by Bloomberg.

Read more: Raytheon Boosts Full Year Net Sales Forecast, Meets Estimates

Raytheon Technologies Corp., as the new company will be called, will be a defense-and-aviation powerhouse, with products such as missiles, jet engines and cockpit electronics. United Technologies plans to spin off its elevator and air-conditioner businesses before the Raytheon deal closes.

Some analysts remain wary about the combination.

“There are integration risks at RTX that few seem to talk about,” Melius Research analyst Carter Copeland said in a note Wednesday, referring to the planned ticker symbol for the combined company. The culture of United Technologies “is faster and more aggressive,” while Raytheon “is more rigid and process-driven.”

“We’re not making the case that one is better than the other, but instead that the differences may be tough to reconcile in many places,” he said.

O’Brien, who will become CFO of the combined company, said the cultures aren’t as different as people might think and that any potential differences could help produce a better company overall.

“I don’t look at it as a challenge, I look at it as an opportunity,” he said.

To contact the reporter on this story: Richard Clough in New York at rclough9@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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