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United Technologies Corp. shed some more light on the path to its potential $121 billion merger with Raytheon Co., set to be closed next year.
Cedar Rapids-based Collins Aerospace's parent company outlined shareholders meeting agendas for itself and Raytheon, with items that need majority approval before they can merge into Raytheon Technologies Corp., in a registration statement submitted Wednesday with the U.S. Securities and Exchange Commission.
UTC's filing also includes lists of risk factors and reasons outlining why officials for the two companies recommend the merger, plus a more detailed description of foreign approvals the companies will need for the deal to go through.
Though the filing does not include dates for the two shareholders meetings, it shows UTC shareowners will be asked to approve the issuance of UTC common stock, par value $1 per share, to Raytheon stockholders in connection with the merger - an estimated 648 million shares in total.
Each current share of Raytheon stock will be converted into the right to receive 2.3348 shares of UTC stock, which will constitute shares of Raytheon Technologies once the companies are combined.
Pre-merger UTC stockholders will own 57 percent of the new company and former Raytheon holders will own 43 percent.
At the Raytheon meeting, stockholders will be asked to adopt the merger agreement the company and UTC announced June 9, as well as a non-binding vote on compensation arrangements for some Raytheon executives.
The SEC statement includes UTC's list of risk factors for stockholders to consider - 12 relating to the merger and seven for the combined company - including adverse factors the companies could face if they fail to complete the merger, such as billion-dollar termination fees and a decline of stock prices.
Among the other potential risks listed are changes in agreements to which UTC or Raytheon are parties that, if waivers can't be negotiated, could result in other parties terminating those agreements or seeking damages, and an inability to successfully integrate the two companies' businesses and realize the merger's anticipated benefits.
The companies' reasons recommending shareholders vote 'for” the merger echo previous remarks from their CEOs, and include the ability to form a 'premier platform-agnostic systems” provider, competitive in the current aerospace and defense landscape by way of its scale and the diversity of its products in those realms.
Also reiterated are the companies' projections that the new company will employ more than 60,000 engineers and invest approximately $8 billion per year in research and development for new technologies.
The statement also unpacks the foreign regulatory approvals that UTC and Raytheon must obtain. Their proposed merger must clear competition laws in the European Union, Australia, Canada, the Common Market for Eastern and Southern Africa, Israel, Japan, the Republic of Korea, Taiwan and Turkey, plus foreign investment laws in Australia, France and Germany.
In June, a Pentagon spokesman said his department is reviewing the potential merger and will submit its views to the U.S. Department of Justice or the Federal Trade Commission, which have not yet indicated whether they will play a role in approval.
United Technologies CEO Greg Hayes last month said he does not see 'any impediment” to completing the merger 'relatively quickly” by the first quarter of 2020, with spinoffs of the companies' Otis elevator and Carrier air-conditioner businesses and the deal closure taking place at the same time.
Go to https://bit.ly/2SnUYOs to read the statement.
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