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U.S. Department of Justice backs United Technologies merger with Raytheon

United Technologies Corp., parent of Collins Aerospace, and Raytheon Co. took one step closer Friday to a deal that woul
United Technologies Corp., parent of Collins Aerospace, and Raytheon Co. took one step closer Friday to a deal that would create one of the world’s largest defense companies. (Associated Press)

United Technologies Corp. and Raytheon Co. have gotten the greenlight on their proposed $135 billion merger from U.S. antitrust regulators.

The U.S. Department of Justice said Thursday it will approve the merger, conditioned on the two companies divesting certain businesses regulators said would “eliminate” competition over products sold to U.S. agencies, including the Department of Defense.

Connecticut-based UTC is the parent company of Collins Aerospace, Cedar Rapids’ largest employer, with more than 10,000 employees working in that city and Coralville, Decorah, Bellevue and Manchester.

Among the divestitures will be Collins Aerospace’s military GPS business, which United Kingdom-based BAE Systems announced in January it had agreed to purchase for $1.925 billion, conditioned on the merger’s completion.

The military GPS business’ roughly 675 employees in Cedar Rapids in Coralville then will report to the precision strike and sensing solutions business area of BAE Systems’ electronic systems sector, and move to a new facility in the Cedar Rapids area

The Justice Department’s antitrust division on Thursday filed an antitrust lawsuit in the U.S. District Court for the District of Columbia to block the merger. It simultaneously filed a proposed settlement with UTC and Raytheon to approve the merger — but hold the companies to the divestitures.

That settlement is awaiting a federal judge’s approval as of Friday morning.

“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.

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“These horizontal and vertical concerns are resolved by the division’s structural remedy, which includes the divestiture of three separate business units.”

Another regulator, the European Commission, signed off on the UTC-Raytheon merger earlier in March.

UTC has said it expects the merger to close early in this year’s second quarter, after it spins off its Otis elevator and Carrier air-conditioner businesses.

Comments: (319) 398-8366; thomas.friestad@thegazette.com

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