Ackman Opposes United Technologies-Raytheon Deal--1st Update

By Cara Lombardo 

William Ackman, a big United Technologies Corp. shareholder who earlier pushed the industrial giant to streamline its business, is now urging the company to call off its planned megamerger with Raytheon Co., which he says makes no strategic sense.

The activist investor sent an email to United Technologies Chief Executive Greg Hayes early Sunday morning after The Wall Street Journal reported on the impending deal. He wrote that he was "extremely concerned" about the combination, according to a copy of the email seen by the Journal. The companies confirmed their plan to merge later Sunday.

The all-stock transaction would create an aerospace-and-defense giant, eclipsed in sales only by Boeing Co and Airbus SE. The proposed takeover, which doesn't include a premium for Raytheon shareholders, would take place after United Technologies completes a plan to spin off its Otis elevator and Carrier building-systems businesses in the first half of next year and become primarily an aerospace business. The addition of Raytheon's big defense franchise would create a company with a valuation exceeding $100 billion -- assuming shareholders and regulators approve it.

Raytheon shares ended down 5.1% at $177.62 on Tuesday, with United Technologies off 4% at $122.94.

Executives billed the deal as a merger of equals that would allow them to cut costs, share technology and protect against a slowdown in demand.

Mr. Ackman begged to differ.

It "makes no sense to us why you would consider a stock acquisition using today's massively undervalued UTC common stock to buy a large business of inferior quality to the company's existing businesses, and for which we cannot comprehend the strategic logic," Mr. Ackman wrote. He added that if United Technologies followed through with the deal, Pershing Square would oppose it, publicly if needed, as would a "substantial majority" of other shareholders.

United Technologies said Tuesday: "We are confident that our shareholders will see the merits of this transaction and the value it brings to them and the company. We will be working diligently in the days and weeks ahead to make sure that the details of the transaction are presented to and fully understood by all shareholders." Raytheon representatives had no immediate comment.

Doug Cameron and Thomas Gryta contributed to this article.

Write to Cara Lombardo at [e-mail]

(END) Dow Jones Newswires

June 11, 2019 16:42 ET (20:42 GMT)

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