Raytheon Merger with United Technolgies

[John Wayden]

Does anyone have ideas what will happen to legacy Raytheon retirees’ pensions after the pending “merger” with United Technologies?

[Robert Bowser]

John,

I don’t think there is any cause for concern. Raytheon is general has been responsible in funding their pension obligations and continues to be in good financial health.

The proposed merger looks like it will not add debt to the new entity, so Raytheon / UT would be in a better financial position, than say it was after the Raytheon (classic), TI, Hughes, E-Systems merger.

There is always a possibility of issues involving in-fighting, cultural misunderstandings, confusion between commercial and defense practices that could exposure the new company to compliance risks, but that would be down the road.

The track record of these sort of mergers, where the market rationale is not compelling, is poor, but again that likely would show up 5-10 years from now in reduced business value.

I don’t think this forum is particularly active, perhaps a good sign that Raytheon retirees have better things to do.

Regards,

Bob

• This reply was modified 5 years, 6 months ago by Robert Bowser.

[Michael Schultz]

Hi All,

The Raytheon/UTC merger proxy prospectus just landed in my mailbox today.

The first thing I looked for was, “What will this do to my Raytheon Common Stock?” Not that I own tons of it, but…
If I read Appendix A, Section 3.1 correctly, each share of Raytheon Common will be multiplied by 2.3348 (the “Exchange Ratio”). That in turn will become the number of shares in the new RTC. That sounds good, but of course says nothing of how the new stock will be valued.

The next question I had (ok, ok, attribute this one to my wife…), was, “How will this effect my pension?”
So this is not as clear, but it seems that Appendix A, Section 6.11 paragraph (b) has words to the effect that, however the original (Raytheon or UTC) company handled (treated? managed?) pension agreement(s), that will be how the new RTC will handle them.
I take this to mean that, inasmuch as Raytheon has consistently been supportive of existing retiree pension benefits, we can expect the new company to continue that support.

I’d love to hear any other interpretations of the legalese in this document.

Cheers!
Mike

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