Tom Kennedy, the chief executive of Raytheon, first approached Greg Hayes, the CEO of United Technologies, about the possibility of a merger in 2018.
Speaking to analysts during a call this morning, Kennedy said the idea came after Hayes announced he was considering separating UTC's Carrier and Otis businesses.
The remaining company, Kennedy said he realized, would look a lot like Raytheon in its structure. It would be a platform-agnostic business with some key franchises and the possibility to pursue more.
"Obviously, we're complementary; we don't have overlap," he said. But the structure of the companies and the technology base were "essentially like looking at Raytheon in a mirror."
Kennedy said he called Hayes in early summer 2018, knowing Hayes was busy spinning off the two businesses and working on acquiring Rockwell Collins.
Hayes thought about it, Kennedy said, and by later in the year said it was a good time to start talking. "By January, we got our teams engaged," Kennedy said. The resulting deal was unveiled yesterday.
Hayes said during the same call that the deal "has been on our radar screen forever."
"The compelling logic was there," he said. "Obviously, last summer was not the best time to make this move."
The merger will create a "platform-agnostic [aerospace and defense] provider," according to Hayes. He noted the combined company will derive 45% of its sales from international work.
Hayes also said the two companies are not expecting "big pushback from DOD."
"In fact, they will see huge benefits from this," he added. "The beauty of this deal is there is very little overlap."
Kennedy said the new company's defense customers will benefit from access to more technology. He pointed to directed energy and hypersonics as areas of focus for the merged company.