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The Cyber Component to United Technologies’ Raytheon Mega-deal

A recently proposed all-stock merger between United Technologies (UTX) and Raytheon would create a combined aerospace giant forecast to be worth more than $100 billion. Beneath the headlines, the move would have cybersecurity implications, as well.

UTX and Raytheon executives have already defended the expected deal against powerful critics. President Donald Trump, speaking with CNBC earlier this month, said he was a “little concerned” the pending merger could be anti-competitive, while activist investor Bill Ackman, whose Pershing Square Capital Management is a UTX stakeholder, said the deal makes no “sense.”

Shareholders’ initial response to the news was mixed, notes The Economist. But, along with balancing UTX’s cyclical business (based largely around Pratt & Whitney passenger-jet engines), with Raytheon’s more counter-cyclical defense work (including Patriot missile production), the merger is also being touted for how UTX’s aerospace capabilities could benefit from Raytheon’s cybersecurity strengths.

UTX CEO Grey Hayes told CNBC that the merger would give "us scale from a technology standpoint to do things that we could not possibly do before, whether it’s advanced analytics, whether it’s AI, autonomy in the cockpit, cyber protection for aerospace systems. … It is phenomenal the opportunities we have.”

Raytheon’s Austin-based cybersecurity unit, Forcepoint, has more than 2,800 employees globally, reports Austin Business Journal. Forcepoint not long ago opened a more than $10 million cybersecurity hub in Raytheon’s home base, Boston, where it’s hiring hundreds. The combined UTX-Raytheon organization would be called Raytheon Technologies.

The Pentagon wants companies that can better protect American forces from cyber attacks, observes The Economist, and both UTX and Raytheon are hoping they can do that better by combining their forces.

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