A spokesperson for Raytheon confirmed to Defense News that the combined company will be based in the greater Boston area.
United Technologies and Raytheon have market capitalizations of $114 billion and $52 billion, respectively.
For Raytheon, the agreement provides exposure to the commercial aerospace sector through the United Technologies' unit, which produces everything from high-value jet engines competing with GE, to cockpit controls, airplane seats and cabin interiors.
Logo of the USA defense company Raytheon is pictured at an worldwide military fair in Kielce, Poland September 7, 2017.
Further, the two companies project annual cost-saving of $1 billion beginning in the fourth year after the close of the transaction.
"Our two companies have iconic brands that share a long history of innovation, customer focus and proven execution", said United Technologies Chairman and CEO Greg Hayes in a statement.
A United Technologies-Raytheon merger has always been speculated on by analysts and investors as the two companies operate mainly in different segments, meaning a deal is likely to attract less scrutiny from regulators than other mergers between big defense players. This resulted in the deal closing in November, 2018, as opposed to the third quarter of that year, which the companies initially targeted.
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A person familiar with the matter told the newspaper that United Technologies is likely to own a majority of the combined company. The combination excludes Otis and Carrier, which are expected to be separated from United Technologies in the first half of 2020 as previously announced. Both Raytheon's and United's board of directors have unanimously approved the merger, which is expected to close during the first half of 2020.
United Technologies could benefit from reducing its exposure to commercial aerospace clients amid concerns that the rise of worldwide trade protectionism will weigh on the flow of goods through air traffic.
The International Air Transport Association, which represents about 290 carriers accounting for more than 80% of global air traffic, cited these concerns earlier this month, when it said the industry is expected to post a $28 billion profit in 2019, down from a December forecast of $35.5 billion.
Hayes will become the CEO of Raytheon Technologies. It could also push other defence contractors, such as Lockheed Martin Corp., to explore expanding their commercial businesses.
Callan also sees "some overlap in the defense portfolios" for the two companies, primarily through the Mission Systems segment of Collins Aerospace.
The two companies have some common customers, but have argued that their business overlap is limited as they face the prospect of US antitrust regulators scrutiny of the merger.